Businessexcellence ACHIEVING
OCTOBER 2010
O N L I N E
Eyes on the
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future Powerwave Technologies plans to be a major force in the wireless revolution
EXCELLENCE BUSINESSEXCELLENCE
Editor’s letter
Businessexcellence AC H I E V I N G
fat
Listening for the
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Editor In Chief Martin Ashcroft mashcroft@bus-ex.com
Recently the National Bureau of Economic Research (NBER), a group of economists whose job it is to declare when recessions officially begin and end, announced that not only is the recession over, but it has been since June 2009.
Managing Editor Bud Sadler bsadler@bus-ex.com
But instead of jubilation, the nation responded to the long-awaited announcement with a nearly universal snort of derision.
EDITORIAL
DESIGN
Production/Creative Director Zachary Smith zsmith@bus-ex.com Production Designer Mallory Lindsley mlindsley@bus-ex.com
BUSINESS
Director of Editorial Research Scott Mason smason@bus-ex.com Director of Sales Sean Brett sbrett@bus-ex.com Administration & Operations Kathy Toomey ktoomey@bus-ex.com Chief Executive Andy Turner info@bus-ex.com Subscriptions info@bus-ex.com Infinity Media LLC 100 Cummings Center Suite 243C Beverly, MA 01915 Tel: 978 232 9284 Fax: 978 560 0999
The NBER’s determination is based on economic indicators such as gross domestic product, which measures the total value of the economy, as well as employment and industrial activity. All this showed June 2009 as the trough of the business cycle, meaning that the economy started growing again after shrinking for five of the previous six quarters. But on Main Street, where the things that really matter are jobs and home values, recovery is hard to recognize. Housing prices and sales are still depressed, and the jobs added this year are far below the levels necessary to lower the 9.6 percent unemployment rate. (Analysts project the US economy to grow 2.6 percent this year; it would require twice that growth rate to reduce unemployment by a single percentage point.) And so people remain in bunker mentality, unconvinced that better times are coming. What has evolved is a deadly stalemate in which consumers are waiting for job growth before they start spending, and businesses are waiting for consumers to start spending before they begin creating jobs. The hesitation of consumers to spend slows the recovery of consumer-driven businesses; and companies need to gain confidence in the economy and know that demand will last before they add jobs. This stalemate is likely to continue until consumers believe the prospects of recovery are good. Despite the NBER’s pronouncement, the end of the recession is like Justice Potter Stewart’s take on pornography: you’ll know it when you see it.
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24 STRATEGY: Exits & acquisitions It’s a deal M&A transactions can be a viable alternative for accomplishing a number of strategic objectives.
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OPERATIONS: Customer service A changed landscape Essentials for competing in the new economy—improve practices, enhance customer service and perfect product lines.
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SUPPLY CHAIN: Picking strategies Picking up Thomas R. Cutler outlines the advantages of simultaneous picking strategies in lightdirected order fulfillment.
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SUSTAINABILITY: Ethics The ethical tool-kit A useful guide for board members and executive committees to clarify the ethical basis for executive choices.
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Powerwave Technologies Inc. Eyes on the future A broader product lineup provides a solid foundation for the wireless revolution still to come.
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Procon Group Major miners A mining services provider goes to remote locations to assist the exploration and mining activities of its clients.
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Skanska USA / S3 Constructors An interest in boring After 75 years of waiting for an alternative subway line, New Yorkers may be seeing light at the end of the tunnel.
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Contents
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Air Serv Corporation Setting sights on new heights Technology and operational excellence will help enhance wheelchair service at London’s Heathrow Airport.
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Homburg Invest Trust in the future The logical act of trust can be one of a company’s hardest resources to measure or to manage.
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Evergreen International Airlines Losing the label This cargo carrier isn’t resting on its laurels— it’s using corporate introspection to improve efficiencies for the future.
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SM&A Helping businesses help the government Enabling clients to prepare for, win and effectively complete government contracts for the past 28 years.
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Grupo Aeroportuario del Sureste (ASUR) Anyone for coffee? Privatization isn’t always a bad thing for businesses: it can also lead to improved performance.
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Stanley Convergent Security Solutions, Inc. Security standout One of the leading providers of integrated security solutions to homes, businesses and government agencies.
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iRely Operational excellence to a tea An innovative software company is proving adept at improving margins for commodity businesses.
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Fulcrum BioEnergy A trash-to-energy revolution A facility that will produce a billion gallons a year of clean, renewable transportation fuel from household waste.
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Genera Energy LLC From farm to filling station The Biomass Innovation Park could become a model for the rest of the country and alter the economics of non-food biofuels.
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Mid-American Cleaning Contractors Cleaning with honors The cleaning industry is continually squeezed on price, but this company tries to provide value in other ways.
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The Linbeck Group Adopting change This construction services provider has adopted innovation as one of its organizational core policies.
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Jipangu Holdings: Florida Canyon Mine Modern alchemy Turning base metals into gold may be impossible, but this mine comes close to making the dream a reality.
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RBH Group: Teachers Village New life for Newark Work will soon begin on a middle income housing project for teachers in the historical center of Newark.
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Wood Partners Making money in hard times Investing in multi-family communities and building efficiently designed structures for the masses.
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Kenneth H. Marks offers a framework for planning successful deals
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erger and acquisition (M&A) transactions can be a viable alternative for accomplishing a number of strategic objectives for emerging growth and middlemarket companies (those from startup to several hundred million dollars in revenue). Let’s take a highlevel view of the buy-side and sell-side processes, and a framework for thinking about and planning each. Exits In many instances the distinction between selling a company (i.e., an “exit�) and raising capital is measured by the amount of equity sold and the contractual rights obtained by the buyer. Financing growth raises the issue of long-term shareholder objectives, which many times involve eventual liquidity. As the wave of business transitions driven by baby boomers planning their legacy and succession continues, some shareholders are confronted with a multifaceted decision of how to finance the continued growth of their business, create liquidity for their owners, and lay the foundation for operations independent of the owner/founder. Others see the opportunity to buy out partners or create some liquidity while staying in the game for what may be deemed a second bite at the apple. This is the concept of selling a controlling interest in a company to a financial buyer (i.e., a private equity group) and rolling over or keeping a minority interest until a subsequent sale or liquidity event happens, when the company is expected to have grown in value (under the watch of the new owners with their capital). There are
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numerous examples where the sale of the minority interest in the follow-on transaction (three to five years from the first transaction) resulted in as much economic gain as the original sale to the financial buyer. Shareholders and partners may find a full or partial exit attractive for many reasons, including: • Diversifying away the risk of having too much personal net worth in a single asset • Minimizing the risk of growth by obtaining a financial or strategic partner • Buying out passive partners and making room in the capital structure for management and employees without dilution to exiting active shareholders. Several potential solutions exist, including recapitalization, sale to a financial buyer while keeping a minority stake, or an outright sale to a strategic or financial buyer with contractual rights for some level of future performance; and there are many variations. Generally a recapitalization will involve a lower cash-out (as a partial exit or staged exit) for the active owners than a buyout (which involves a change of control). A recapitalization will most likely be focused on changing the relative mix of debt and equity with an eye toward the growth objectives of the company and the required go-forward capital. For example, a leveraged recapitalization will most likely increase the debt of the company in exchange for distributions, dividends, or purchase of equity. Acquisitions Acquisitions can meet a number of goals if approached and executed as part of a long-term strategy. Some of the typical reasons executives pursue acquisitions include: • To accelerate revenue growth • To enter an adjacent market space • To expand into a new geography or obtain a physical footprint in a new location • To access new customers • To access technology • To strengthen the pool of talent and capabilities • To complete or augment a product or service line • To reduce costs • To capture market share • To prevent a competitor from gaining these advantages. The first phase of a typical acquisition process will address finding a target company to buy; this
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begins with the strategic plan that should lay the foundation to determine many of the parameters and the focus of the process. The second phase of the process is to structure the deal, close the transaction, and integrate the business. The financing strategy to support the acquisition should initially be thought of in the context of the overall acquisition process and be defined as part of the acquisition strategy (phase one), understanding that the process will evolve and is somewhat iterative as knowledge is gained from the marketplace. If your company is cash flush or the acquisition target is immaterial in value, the financing strategy may be as simple as funding the transaction from operational cash flow or cash reserves. However, if the deal requires external funding, management must consider a financing strategy, which typically begins with understanding the acquiring or buying company. This involves: • Determining its valuation and financial strength • Establishing financial objectives and benchmarks for vetting possible acquisitions • Determining parameters around how much the buyer can afford • Conducting internal discussions around an ideal or preferred deal structure • Establishing relationships with financing sources and obtaining buy-in regarding the acquirer’s plans • Obtaining evidence for potential sellers of the buyer’s ability to finance and close a deal. From these parameters, management can then think about financing a specific target company— which is a function of the value of the target, likely cash flow of the target, the deal structure and the integration strategy. Start by assessing the value of the target acquisition as a stand-alone business using traditional valuation approaches; then value the acquisition in the context of your business giving consideration to cost savings and lift that may be obtained on a combined basis. Another metric that may be useful in the process is to determine the financeable value. This is the amount that can be paid using external financing based on the assets and cash flow of the target. The deal structure and financing strategy are developed by weighing a number of factors to find the optimum solution to meet the objectives of the parties involved. Among other things, these factors
Strategy: Exits & acquisitions
include the integration strategy and the valuation gap—that is the value that your company is willing to pay and what is required to get the deal done. Management should keep in mind some core concepts as it takes an objective view and embarks on the acquisition process: • Begin with the end in mind; set clear objectives and benchmarks to gauge the attractiveness of potential target companies and particular deals • Develop the financing strategy up front and establish relationships with likely sources of financing • Terms are likely more important than absolute valuation • Align the financing strategy with the operating/ integration plan and deal structure • Focus on value creation. Regardless of the eventual solution or desired outcome, start with the same process. The essence of the front-end steps in the selling or financing process is analysis and
understanding of the shareholders’ and company’s objectives, financial and competitive position, growth strategy and initiatives, and valuation. Keep in mind that whether selling the entire company or raising a tranche of growth capital (in the form of debt or equity), what you are really selling is the future cash flow of the business. While past performance provides credibility to management’s claims, future cash flow is the foundation for valuation and usually the primary reason for buying or investing in a company. Kenneth H. Marks is the founder and a managing partners of High Rock Partners, providing growthtransition leadership, advisory and investment. He is the lead author of the Handbook of Financing Growth published by John Wiley & Sons. www.HandbookofFinancingGrowth.com. You can reach him at khmarks@HighRockPartners.com
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Bob Vormittag, CEO, VAI, discusses the essential components for any business to compete in the new economy—improve practices, enhance customer service and perfect product lines
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s the world economy slowly emerges from recession, many companies are taking stock, analyzing losses and evaluating lessons. In the past two years, the harsh reality of reduced profit margins forced smart firms to adjust internal operations and service models to compensate. While this has been a difficult period for companies in nearly every industry, we can reflect on the recent past and emerge with a renewed vision and charge to improve practices, enhance customer service and perfect product lines. Truly embracing this as an opportunity to work smarter and reevaluate priorities will allow room to implement the essential components necessary for any business to compete and win in the modern economy.
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Supremely competitive products and services that offer extreme value are critical now more than ever. Quite simply, companies must perfect offerings to meet customer expectations. This is an achievable goal if we take the time to listen to our client base, proactively seek out suggestions and incorporate relevant recommendations into new releases. The formula is a simple one, but the time and effort involved in making this an achievable goal is significant. It is important to understand that soliciting this type of feedback from your customer base requires a prolonged and concerted effort, built into the research and development process. While this likely requires some reorganization of established practices, the benefits are well worth the effort and will enhance product and service offerings, while catering to customer needs. This process will provide insight into the requirements of your market and inform the next phase of innovation, guaranteeing that your company keeps its current clients happy and has the capability to win new clients based on product capabilities. Certainly, the R&D process should be mindful of pricing concerns. Today’s customers demand that products and services provide exceptional value for money. To meet this demand, companies must streamline processes as much as possible to build in the required value. A meticulous, systematic evaluation and justification of every sustained cost is essential. This practice will uncover where and what is expendable. To perform an impartial assessment, a company should create formal procedures to examine costs and adjust where necessary. Customers expect more bang for the buck, and companies must be prepared to deliver the WOW factor at an affordable price point. This means that businesses should be prepared to deliver more and enhance product applications and features to provide unprecedented value. From good to great Good is no longer good enough—customers expect unbelievable customer service. This is true for every aspect of a business including contract programming, on-site services and support, help desk, quality control, research and development, sales and administrative support. Each customer touch point must provide value. Knowledge of your company’s products and services is imperative and this is only
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Operations: Customer service
achievable through proactive training programs. Employees must have a clear understanding of what is expected of them in order to provide the standard of service that your company needs to compete. Communication is key—now more than ever. Continuous and prioritized communication with customers will make your company stand out from the pack. Clients fully expect communication to be a priority. Initiatives should include interactions from both sales and technical support to offer clients the expert guidance and support needed to move them forward with their specific business initiatives. Understanding your client base, their business challenges and providing long-term, comprehensive solutions to help them achieve their objectives is essential and can only be realized through constant contact. The bottom line should be clear and concise, and the sales team must relay the core value of all product offerings, including labor cost reduction estimates, continuous efficiency enhancements and demonstrated, long-term customer service and new business development benefits. It is not enough to build an exceptional offering unless your clients understand what makes it different or better than the competition. Train your staff to communicate these messages clearly and the benefits will be enormous. Make partner channels a priority David Ogilvy said, “Surround yourself with partners that are better than you are,” and in that spirit, partner channels must be given new priority and focus in the new economy. Again, consistent communication that articulates your company’s “go to market” strategy and provides adequate support to make these goals achievable is highly important. Helping your partner community realize success will amplify your industry exposure, open up new market opportunities and build relationships that are mutually beneficial. For many companies, partner channels play a prominent role in victories and failures. To ensure success, develop comprehensive campaigns that provide achievable goals and the tools to get there. Additionally, plan to facilitate important partner initiatives with new procedures to ensure effective relationships are built and not ignored. A renewed focus of this most important channel will establish strong working relationships that
last well into the future. It is worth repeating that prospects assume that potential vendors will offer more than ever to win their business. This includes providing a detailed and extremely competitive proposal that outlines real costs and time frames. In most cases, on-site visits will be essential to winning new business. The sales team must include a long-term, achievable plan based on prospects’ business needs and specific pain points. Most important, sales teams must relay a vision of labor cost reduction, continual improvement of efficiencies and demonstrated and long term commitment to enhancing a prospect’s customer service and new business development initiatives. Look forward Economic fluctuations are a given and companies can never fully anticipate these changes, but we can be watchful of trends and adjust our business practices accordingly. Especially in difficult economic periods, access to exceptional employees and timely, accurate information to make intelligent decisions will arm smart firms with the resources needed to survive this particularly competitive market. Restructuring operations by leveraging technology to inform decisions with data and trends should be a high priority—it is more important now than ever to identify costs and logically forecast demand. Technology solutions endure as the greatest defense for remaining competitive, especially since they deliver the substance from which management makes choices that affect the bottom line. Smart companies are taking advantage of the economic downturn and are anticipating profitable times ahead by working smart and hard to earn new business and keep existing customers happy. The coming year presents another opportunity to push ahead of the competition. Overspending is outdated, rightsizing is in. In this environment, companies can win bigger deals, and more of them, by offering better pricing, added flexibility and a more comprehensive solution. Most important, providing personalized service and support that outshines the competition will drive the good companies to become the great companies of tomorrow. Bob Vormittag is CEO of VAI, a Long Island-based enterprise software developer. www.vai.net
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Supply chain: Picking strategies
Thomas R. Cutler outlines the advantages of simultaneous picking strategies in lightdirected order fulfillment: pick-to-light, pick-to-display, and now build-to-light
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ight now, hundreds of thousands of pick-to-light modules are illuminating in distribution centers across the globe, directing order fulfillment operators to their next correct pick. For over three decades companies have been efficiently processing millions of orders each year with single or multiple light-directed applications in their supply chains. These original installations provided considerable increases in productivity, accuracy and customer service over manual order selection techniques. These legacy pick-to-light applications are also keeping their users from the current best practices and techniques. There have been many breakthroughs in light-directed order fulfillment technologies, and today’s highly sophisticated systems are quite differentiated from their legacy counterparts. These new solutions offer cable-free light module hardware for greater ease in system installation, expansion, re-slotting and maintenance. They also feature progressive software tools for better management of light-directed picking operations and improved visibility into the productivity of their pick process.
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Supply chain: Picking strategies
A significant key advance is the application of pick-to-display technologies to support simultaneous order picking strategies, as opposed to the sequential approach executed by pick-tolight systems. Lightning Pick Technologies has helped numerous companies progress from sequential order picking methodologies to simultaneous pick processes by retrofitting pick-to-light systems with advanced pick-to-display solutions over the past quarter century. According to Bernie McCabe, a senior executive with Lightning Pick, “We have collected data from many of these projects to effectively compare the productivity and accuracy of the two approaches.� McCabe outlines below the benefits of simultaneous order picking and provides case studies of two recent
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adopters of pick-to-display solutions over their previous pick-to-light systems and the benefits quickly achieved after making the transition. Over the years ‘pick-to-light’ has become the generic industry term encompassing all lightdirected order selection and sortation systems, differentiating the overall approach from paperbased picking, RF picking, voice-directed picking and other methods. Even users of put-to-light for direct-to-consumer fulfillment or retail store replenishment operations (sometimes called pack-to-light) often recognize themselves as ultimately being part of the pick-to-light universe. However, on an application level there is a vast difference between pick-to-light systems–popular in the first major wave of light-directed systems installed in the 1980s, and the pick-to-display solutions available today.
picks that quantity at the illuminated location and then pushes a confirmation button to complete the pick. After that pick is done, the next LED will illuminate and the bay display will show the quantity needed at that product location. The process repeats itself until all the picks for that zone are complete. The bay display will then direct the operator to send the container to the next zone or provide other instructions. Pick-to-display Pick-to-display takes these benefits to the next level by applying light modules featuring both LED indicators and quantity displays at each product location. When an operator scans a tote in their zone, all product locations requiring picks in the zone illuminate. The operator can see all product locations needed for the order, and each location light module tells them the quantity of items to pick.
“We have collected data from many of these projects to effectively compare the productivity and accuracy of the two approaches” Pick-to-light Light-directed systems are frequently applied in zone picking, formats to optimize broken case quantity order fulfillment. In zone picking orders travel along an assembly line, stopping at individual pick zones where operators ‘build’ the order by adding items to the order required within their zone. In pick-to-light, a light module is applied to the flow rack, shelving or other storage media at each product location. Each light module has an indicator light to attract the attention of the operator, and a button to be pushed when the picks at that location are complete. Some new light module designs feature indicator LEDs that are also the confirm button. A bay display (sometimes called a bay controller or bay light) is also applied to each zone, often in a central location in the bay or area. In a pickto-light environment, often the operator will scan a bar code license plate on the tote or shipping container to launch the pick sequence in their zone. This illuminates an LED at the first product location requiring picks. The operator reads the bay display, which communicates the quantity of those items required for the order. The operator
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Sequential vs. simultaneous picking Pick-to-light is a sequential pick process. In pick-tolight systems the light modules direct the operator to one pick face at a time. This sequential process makes the operator physically pause in between each pick while waiting for the system to provide the next location. Once the next light is found, the operator must again pause to view the pick quantity presented separately on the bay display. Pick-to-display is a simultaneous pick process. In pick-to-display systems Operators can see all pick faces needed for the order at the same time. All location and quantity information for the first pick is right in front of her. She can also see that her next hand movement will be to the product location above her current task. After she places items in the tote and turns back to the flow rack, she already knows exactly where her next pick will be. The bay display at her upper right hand side also shares the order number for the job she is working on. The simultaneous pick-to-display approach is significantly more productive than sequential pick-to-light systems because: • Pick-to-display removes the pauses between each pick. Simultaneous picking eliminates time
Supply chain: Picking strategies
wasted waiting for pick directions from the system, allowing the operator to quickly move from one location to the next in one smooth process • Pick-to-display allows operators to execute one pick while anticipating the next. By seeing all illuminated pick faces at the same time, the operator mentally processes the next pick and prepares for the physical movement necessary for the task • All the information that operators need is right in front of them. This significantly increases pick accuracy and productivity by keeping the operator’s attention in one place—at the actual product location. There’s no need to step away from the pick location to get a better view of the bay display, because the indicator LED and quantity display are both located at the pick face. • The bay display’s capabilities are expanded. In pick-to-display systems the bay display can share other useful information besides pick quantities. The bay display can present order numbers, lot numbers or special picking instructions to ensure quality and performance. Bernie McCabe detailed the following two Lightning Pick case studies which highlight the immediate and remarkable results two leading companies achieved when they replaced their existing pick-to-light applications with new light-directed technologies. Among other contributing factors, these users largely attribute the major productivity and accuracy increases to implementing new pick-to-display solutions. Company #1: A leading manufacturer of personal care products & accessories This retail supplier wanted to improve throughput and order accuracy, particularly to optimize its Wal-Mart order fulfillment operation. It replaced its existing pick-to-light system with a 1,600-location system from Lightning Pick Technologies. The new pick-to-display system installation took 36 hours in total (to completely tear out the existing system and install the new one). Within four weeks of installing Lightning Pick, the retail supplier’s average pick rate of 146 lines per hour (per picker) jumped to 175. This exceeded the initial target rate of 161 lines per picker hour to provide an immediate 20 percent increase in productivity. During its latest Wal-Mart roll-out, the company hit 261.93 LPPH. Since installing a pick-to-
display system the customer achieved a 55 percent increase in pick rate productivity. In the four weeks before retrofitting its pick-to-light system, the company averaged a 98.94 percent accuracy rate. In the four weeks after installation, its accuracy rate jumped to 99.35 percent. All of these goals were met with a 30 percent reduction in labor. The project also improved pick visibility with a newer, brighter light module and pick flexibility was improved by the addition of cordless scanners. Company #2: One of the world’s leading distributors of Christian resources used a pick-to-light system for its books and literature pick line The company wanted to improve customer service by improving the productivity of its order fulfillment process. The new pick-to-display system replaced 1,800 pick-to-light modules. The new pick-to-display system installation took three days to implement and was followed by a 22 percent improvement in productivity and a 4 percent increase in order quality. The customer reduced labor costs by 10 percent and was able to fill customer orders the same day it received them. System maintenance and down-time costs were also significantly reduced. Build-to-light The newest development in these effective supply chain efficiency techniques and tools is build-tolight, used by build-to-order and assemble-toorder manufacturers. Build-to-light is the first lightdirected error-proofing system and reduces errors within critical procedures such as parts picking, kitting, assembly and sequencing among others. Lights mounted on workstations, bin shelving or other material storage media direct operators to the correct parts, quantities and sequences to execute their task with greater accuracy than paper-based methods. McCabe was enthusiastic about this new product, noting, “With increasing demand for customizable manufacturing throughout the supply chain, this new technology is likely to pioneer the next generation of costeffective picking solutions.” Thomas R. Cutler is president & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., and founder of the Manufacturing Media Consortium of journalists and editors writing about trends in manufacturing. www.trcutlerinc.com
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The
ethica Dr. Abdullah Telmesani offers a simple but profound test for making ethical decisions in business—a useful guide for board members and executive committees to clarify the ethical basis for executive choices
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chieving higher levels of ethical conduct, as is the case in achieving all optimal positions, is a balancing act. For corporations, ethical attitude and sustainable success are achieved by striking a balance between the bottom line on one side and the interest of the employees and the community at large on the other. Employees’ ethical behavior and success, on the other hand, are achieved by balancing their personal interest with their companies’ interest.
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The formula above seems, according to the Deloitte 2010 Ethics & Workplace Survey, to be partially compromised. In their struggle to survive the recession, some companies seem to have had to take drastic decisions that are not typical to their corporate cultural norms. These corporate actions and decisions naturally lead to employees’ uncertainty about corporate decisions and intentions. This feeling of uncertainty and lack of clarity shaped the responses of 46 percent of the employees surveyed, when they indicated that a lack of transparent leadership communication would drive them to seek new employment opportunities. Furthermore, 48 percent of employed Americans who plan to look for a new job when the economy is more stable cite a loss of trust in their employer as a result of how business and operational decisions were handled over the last two years as a reason for leaving their companies. While the ethical formula outlined above is partially compromised, the good news is that it did not collapse. The Deloitte 2010 Ethics & Workplace Survey indicates that, in spite of the feelings of uncertainty about their companies’ decisions and actions, 72 percent of them still believe that their employers are responsive to their work/life balance needs. In essence, the employees, according to the survey, believe that their employers are still honoring
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the fundamentals of the ethics formula. Employers are at least attempting to balance the companies’ interests with their employees’ interest. The Deloitte 2010 Ethics & Workplace Survey does not go into the second part of the formula, however, which is related to companies’ attitude towards the interest of their communities at large. As in the case of employers, employees’ ethical formula can also get partially compromised under pressure and times of uncertainty. This is indicated by the Deloitte 2007 survey, when 91 percent of employees surveyed indicated that they are more likely to behave ethically at work when they have good career-life fits. This statement does indicate that employees’ ethics formula of balancing their interest with their companies’ interest can also be compromised under pressure. The balance of the ethics formula, in light of the above, could be compromised under pressure for both the employers and the employees, especially in times of difficulty and uncertainty. In attempting to minimize compromising the ethics formula between the employer and the employees, companies have elaborate codes of ethics to guide employees and employers’ choices. From my experience and from teaching professional ethics to architecture students in the 1990s, it became evident to me that balancing the ethics formula comes from inside us, not from
Sustainability: Ethics
codes of ethics. Making choices between ethical and non-ethical actions are among the most personal decisions, which we don’t usually like to discuss with others. This makes it important to simplify this formula and make it readily available to employees and employers whenever needed, and with total privacy. In an attempt to simplify the ethical formula and improve its applicability for employees and employers, there is a practical tool, which I call the ethical tool-kit. This tool-kit consists of two levels. The following case study describes these two steps and indicates their applicability to professional practice. While evaluating tenders from various suppliers, John noticed how close the bids were in terms of prices and quality. During this period of evaluation, John met a friend who informed him indirectly that one of the suppliers was willing to pay for a personal trip for him and his family if he overlooked one of the conditions that this supplier did not satisfy. John faced a dilemma in making a decision to award the contract to the supplier related to his friend. Overlooking the condition of this supplier would not affect his company negatively, and no one would even notice it. In trying to arrive at a decision, John followed the two-level ethical toolkit test as follows: 1. The internal test: In this test, John checked
his gut feeling about awarding the contract to this company. Doing that, he realized that he felt uncomfortable about it; however, knowing that awarding the contract to this company would not affect his company negatively, made him feel more comfortable about awarding the contract to that specific supplier. In order to arrive at the right decision, John followed the second step of the test. 2. The disclosure test: In applying this step of the test, John looked at whether he would feel good about letting his colleagues, his family, and others know about the basis for awarding the contract to this supplier. Thinking about that made it very clear to him that awarding the contract to this supplier would not be ethical, since he would not be comfortable with letting others know about the real basis for awarding this contract to this supplier. The above tool-kit can be used by employees and employers at all levels. It can also be a useful guide, or exercise, for board members and executive committees in clarifying the ethical bases for executive choices. Dr. Telmesani holds a master’s degree from Harvard University and a doctorate from the University of California at Berkeley. In his book The Balanced Way: The Path to Excellence and Contentment he provides insight on ethics as it relates to business and personal behavior, along with many other topics relating to balancing career success without sacrificing your personal life.
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Eyes the fut
Having digested and integrated a wave of acquisitions to broaden its p make it an even stronger force in the wireless world, Powerwave Techn eyeing long-term future growth. Keith Regan learns how operational ex supplier strategy and low-cost procurement techniques provide a solid company to have a major hand in the wireless revolution that’s still to
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sture on
Powerwave Technologies Inc.
product lineup and nologies is now xcellence, a careful foundation for the come
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ince it was founded in 1985, Powerwave Technologies has evolved and changed dramatically along with the wireless industry itself. Originally a provider solely of power amplifiers for analog land mobile radio wireless networks and first-generation cellular systems, Powerwave executed an aggressive diversification strategy that saw it acquire a host of firms and technologies that in turn expanded the scope and breadth of the company’s product offerings.
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Powerwave Technologies Inc.
Syrma Technology
The Santak Group
Syrma Technology has a rich legacy of providing
Our company specializes in producing precision
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machining components. Our services include
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mold making, die-casting, precision machining
including Powerwave Technologies. Syrma, with
and
the additional resource depth of the Tandon Group
assembly for customers that require complete
companies, offers global OEMs unparalleled
solutions. The industries we serve include
partnership potential and the ability to rapidly
fiber optics, mobile communications, wireless
profit from the numerous opportunities afforded
communication devices, hard disk drives, and
by the emerging India market.
consumer electronics, etc.
manufacturing
and
supply
From the 1999 purchase of Hewlett-Packard’s radio frequency amplifier business to the 2004 acquisition of LGP Allgon and the 2006 purchase of filtering product lines from Filtronic plc, Powerwave impressively grew its footprint and its reach. Purchases such as that of UK-based Toracomm Ltd. helped provide it with intellectual property in the radio frequency, digital signal processing, system design and system simulation realms, while the 2005 pickup of Kaval Wireless of Ontario, Canada, helped make it a major player in the in-building wireless coverage space, which today is seen as a booming part of the market. The buying spree left Powerwave with a much larger revenue base—and a product array that made it a favored one-stop shop for its network carrier customers. But it also left the company facing a sizable integration challenge that spanned the globe, according to chief operating officer Marvin MaGee, who has been with Powerwave for three and a half years and in the technology industry for more than two decades.
turning.
We
also
provide
integrated
“There was a lot of demand from our customers for more solutions, so we used our amplifier strength as a platform to acquire antenna solutions, filtering solutions, coverage solutions, towermounted amplifiers and even software solutions,” MaGee says. “The strategy has worked extremely well in terms of enabling us to provide a one-stop shop for operators and one of the most complete and well-integrated and consistent product and service lines that network operators could use.” The strategy helped grow sales dramatically during the early part of the last decade, and starting in 2007, Powerwave, which is headquartered in Santa Ana, California, sought to accelerate the process of aligning culture and management teams and then drive a consistent supply chain and supplier strategy to create a single, simplified platform. Back-end systems were attacked, with a common IT platform that used standard applications suites from Oracle, PeopleSoft, Microsoft and Agile, among others, and helped support a single strategy around everything from procurement and
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Powerwave Technologies Inc.
UTi We at UTi have been associated with Powerwave Technologies for over three years. The services we offer to Powerwave are warehousing, testing, packaging, transportation and distribution of antennas across India. This is ably supported by IT system WMS4000, which provides real-time visibility and makes the transaction smooth. We offer these services to our clients PAN India, where we have 22 locations supported by 400 people offering forwarding by air freight, sea freight - export & import, brokerage, warehousing and distribution.
Venture Venture is honored to be a strategic partner of choice of Powerwave over the last decade. From the early years of manufacturing PCBA, Venture has moved up the value chain to become an
end-to-end
solutions
provider,
building
scale, competencies and capabilities across its operations to support the business. Venture is inspired to build new levels of excellence to reinforce Powerwave’s pursuit of innovative nextgeneration products.
financial tracking to human resources. “As we approached consolidation, we kept in mind the business strategy we were trying to accomplish with each acquisition,” MaGee comments. “There is always a larger business reason for it. There is the top-level value proposition around acquiring products and technology and diversifying a product line, but also a subset of skills that a company or entity brings to your operations. You may buy a company that makes filter products, but behind those products lie technical competence and market knowledge that are really the core of the competitive advantage they bring. You need to go about integrating in a way that protects that intellectual property and
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Powerwave Technologies Inc.
NXP Semiconductors NXP
Semiconductors
N.V.
(Nasdaq:
NXPI)
provides high-performance mixed-signal and standard product solutions that leverage its leading RF, analog, power management, interface, security
and
digital
processing
expertise.
These innovations are used in a wide range of automotive, identification, wireless infrastructure, lighting,
industrial,
computing
mobile,
applications.
consumer
Headquartered
and in
Europe, the company has approximately 28,000 employees working in more than 25 countries and posted sales of USD 3.8 billion in 2009. For more information, visit www.nxp.com.
that brain power that made those companies acquisition targets in the first place.” Cost-conscious sourcing strategy A major part of the integration strategy was to align the supply chain to take advantage of lowcost sourcing as much as possible. Engineering is largely concentrated in India, for instance, and suppliers are located around the world based on both quality and cost considerations. “The site selections we consolidated to were guided to a significant degree by performance capability,” notes MaGee. “A big part of it from the production perspective is the supply chain. We wanted to remain close to the customers we were gaining as a result of the acquisitions and keep those eyes and ears but also look at how we could gain a competitive advantage on the cost side as well.” The buying spree made it necessary to consolidate the supply chain, and through an extensive supplier selection process the supply chain was revamped to source from low-cost regions of the world whenever possible. “We wanted to protect the quality and value proposition we offer while also driving for low-cost execution capability at every turn,” MaGee says. “We feel very comfortable with the operating structure we have in place now, in terms of both cost and performance measures as well as our ability to scale.” Powerwave uses a host of techniques to ensure its operations run smoothly and continue to improve over time, including lean—kaizen events are staged regularly at its production and assembly facilities—and six sigma.
Organic growth ahead Being able to scale quickly if necessary is critical because Powerwave believes it has itself positioned to enjoy a strong stretch of growth as consumer demand for wireless devices—and the bandwidth they demand—continues to grow in established economies such as North and South America, the Far East and Europe and as emerging nations begin to build telecommunications infrastructure that relies heavily on wireless technologies. Powerwave, which was founded in 1985 and went public in 1996, not only helps carriers operate networks but helps address issues that are emerging as more people are adopting wireless as their first choice for telecommunications. For instance, amplifiers that help signals reach into and out of buildings are a major growth area in markets such as North America. Powerwave’s products address both traditional wireless networks as well as emerging and next-generation 4G technologies such as WiMAX and LTE. Powerwave addresses those markets with a workforce of 2,200 from 20 locations around the world, including main regional offices in Hong Kong, Sweden and California and a direct presence in some 14 countries. It relies heavily on suppliers and contract manufacturers, performing mainly subassembly and finishing work, as well as some engineering and product design. “Everybody in our company is excited by the wireless markets we serve, and the opportunities we find in such a fast-paced environment require a rapid response capability. We have lean pull systems in place and an integrated logistics system—all of which are critical for responding to week-by-week demand changes,” says MaGee. “Responding to growth also requires flexibility, and we spent a lot of time thinking about that when we designed our production and fulfillment network. We feel we have facilities we can scale, and we hand-picked supplier partners that can grow with us in a market that we anticipate will continue to expand for some time to come.” Growing greener Powerwave is constantly working on new products as well as making improvements to existing technologies, using its sales and service force to return feedback that is funneled through productline-focused business units. The process starts with ongoing market analysis and an internal review that constantly seeks to balance where R&D funds are spent to maximize their value. From there, the product development journey
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Powerwave Technologies Inc.
includes reaching out to the supplier community as well as internal manufacturing capabilities and then continues with concurrent engineering among all parties with the goal of arriving at a common platform. “From there we have what I think is a fairly standard process of tollgate checkpoints to evaluate how we are progressing through the development cycle,” MaGee says. Alpha and beta modeling and prototyping work is done in development centers—concentrated in India—and then production ramp-up begins with pilot programs. “From a systems engineering and product requirements point of view, we really have tried to keep the experts with that knowledge base close to the different markets we’re trying to address. We try to make those product decisions as close to the markets as possible.”
Over time, Powerwave has worked with suppliers to develop more efficient models, with power efficiency today more than double what it was a decade or so ago. “Electricity is a large part of the expense profile and operating budget for wireless operators,” MaGee notes. “For that reason and because they all strive to be very responsible corporate citizens, they have very thoughtful green initiatives of their own in place. We continue to see progressive and steady improvements in the energy efficiency of our products, and that remains a constant emphasis for us at the product level.” Dovetailing with that push for efficiency are efforts to make many of its products easily compatible with renewable energy sources, designing them to be easily integrated with
“We continue to see progressive and steady improvements in the energy efficiency of our products, and that remains a constant emphasis for us at the product level” Whenever possible, Powerwave will seek to have suppliers do the bulk of the production or enlist the help of contract manufacturers who can build specific components or platforms in a consistent way. Doing so enables the company to divert those dollars that would be spent building factory capacity into research and engineering, where the heart of its value proposition lies, according to MaGee. “In terms of investing our capital, our preference is to reserve it and expend it on higher-leverage value-added engineering and development,” MaGee says. “We’re a product and services company, and the core of our value proposition is that we have the engineering knowledge to enable customers to maximize what they are trying to do with their business by providing solutions that are best in class. Having operational excellence enables us to support that value-add by having responsive supply chain partners that can give us a technological and service leadership advantage.” One innovation that customers crave—and Powerwave delivers—is to produce increasingly green or sustainable equipment. For instance, the company’s original main product line, power amplifiers, uses a significant amount of electricity to help boost the strength of wireless signals.
supplemental energy sources, such as battery backup power, or even designing products with built-in solar panels or wind turbines to help complement main energy sources. “We also have our own in-house green initiative that brings together all of our own efforts in the areas of building efficiencies, waste management and recycling, and our own social responsibility programs,” MaGee says. “Like most companies, we’re constantly evaluating how we’re running our business from that perspective.” Thriving in a difficult year Top-line sales growth was the norm at the company as its expansion and diversification strategy dovetailed with the booming wireless space. But 2009 was a difficult year for many companies, and Powerwave was no exception. Sales fell from $890 million in 2008 to $567 million last year as recession and financial crises battered many of its customers in both the original equipment manufacturing space and network carriers themselves. Its exposure to emerging markets also meant it had to deal with significant issues such as currency devaluation as well. “What was encouraging for us was that, given how much we had simplified and consolidated our business, we were able to reduce costs faster than revenues fell,” MaGee says. “So even
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Powerwave Technologies Inc.
though it was a very challenging year in terms of revenue, we were able to generate positive cash flow even in the face of a very tough economic environment.” In fact, total operating expenses for 2009 were $144 million, a reduction of over 30 percent from the $212 million Powerwave spent the year before. While the first half of 2010 has continued to face global economic issues, there have been signs of rebounding and a return of top-line revenue growth, as several major wireless carriers directed more of their own cash into their capital expenditure budgets for this year and going forward. Carriers such as Sprint, AT&T and Verizon, among others, are investing hundreds of millions to build nextgeneration networks capable of delivering content at even faster speeds, each seeking its own competitive advantage in the process. “The magical user experience created by iPhones and BlackBerries drives insatiable data demands that have really put a huge strain on the capacity of network operators,” MaGee points out. “If you look at the top level indicators, it appears the capital spending budgets of network operating companies have the potential to return to their historical growth trajectories.” Keeping suppliers on the same page Because its business model has it relying heavily on third parties to supply components and technology, Powerwave works hard to ensure that all are on the same page regarding not only current efforts but what lies ahead as well. Each year the company gathers a group of 50 to 60 of its top suppliers and key partners; this year’s event will take place in Singapore in December. “It’s a key part of our supplier strategy,” MaGee says. “We have representatives there from the semiconductor industry, electronic and mechanical equipment makers, and suppliers of logistics and inventory
management services. Those partners are a key part of our drive for market leadership and our strategy for execution.” This year’s topics will include searching for ways to make greener products and keep costs down as well as a look ahead to the next-generation networks that carriers are seeking to build out across the globe, MaGee says. Powerwave will share its expectations for 2011, which in turn will help suppliers lay the groundwork for being able to align their own production efforts. The opportunities abound. In emerging countries, wireless networks are often being built as a first-generation telecommunications infrastructure, with the ability to provide even far-flung and remote populations with not only voice but data services. And in locations such as North America, with 70 percent of wireless calls or data requests coming from inside buildings, stadiums and other structures today, carriers are seeking technologies to help boost signals to get them through thick walls and other structures to keep customers happy with their service, MaGee points out. The explosion of mobile content—music, video, news and applications—is also helping to drive network operators to build capacity. With its long-term expansion and integration strategy, Powerwave is positioned to help carriers address those and other issues, and it will constantly seek to innovate to be ready for the next wave. In addition to its products, Powerwave is aggressively growing the services side of its business as well in response to customer needs. The company provides engineering support and design advice on how best to set up networks, including where on a network to best place equipment or how to design a network to maximize revenue generation. Post-installation work such as monitoring equipment performance and providing maintenance and upgrade support is another growth area. And before long, MaGee expects other opportunities will emerge that have yet to appear on anyone’s radar screen. “It always seems that just as the industry gets adjusted to the current reality, another wave of technology comes along that people have a voracious appetite for,” MaGee says. “As a business we believe strongly in reinvesting the cash that we bring in. We continue to invest about 10 percent of our revenues into research and development, and we remain very excited about what we can do with that investment.” www.powerwave.com
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Majo 36
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Procon Group
orminers The Procon Group of Companies is a leading provider of mining contracting services in North America and beyond, sending its labor force and equipment to remote locations to assist the exploration and mining activities of small and large clients alike, Ric Larson discovers
“A
thousand men, say, go searchin’ for gold. After six months, one of them’s lucky: one out of a thousand. His find represents not only his own labor, but that of nine hundred and ninety-nine others to boot. That’s six thousand months, five hundred years, scramblin’ over a mountain, goin’ hungry and thirsty. An ounce of gold, mister, is worth what it is because of the human labor that went into the findin’ and the gettin’ of it.” —Howard (Walter Huston), in The Treasure of the Sierra Madre. Howard was right about the intense labor it took to find and mine gold in the days when miners rode on burros with picks and shovels slung over a heavy pack. But nowadays the finding and the getting of gold and other precious metals—as well as diamonds, potash and a range of base metals—is a lot easier thanks to The Procon Group of Companies, based in Burnaby, British Columbia, a provider of the above-ground infrastructure and construction services needed for mining and civil industries in Canada and North America.
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Procon Group
Control Flow Hydraulics Ltd. Control Flow Hydraulics Ltd. is an Alberta-owned and -operated business that has been in business since 1989. Control Flow is a machine shop that operates primarily in the hydraulic sales and service industry. We specialize in the manufacture and repair of every make and model of hydraulic cylinders, pumps, motors, valves, winches and accumulators. We also sell new parts and are a distributor for Oilgear, HydraForce, Yates, Headland, Filtrec, DMIC and more. We service many sectors of the economy such as oil & gas, mining and the forestry industries.
When Ed Yurkowski and Jim Dales formed Procon Mining & Tunnelling Ltd. in 1992, they set out to create a contract mining firm that would offer experienced, safe and efficient services to the mining industry in Canada, the US and in some cases, overseas. Eighteen years later Procon has risen to become one of North America’s leading full-service mining contractors and one of the top 30 general contractors in Canada. With offices in Nisku, Alberta; Yellowknife, Northwest Territories; and Bellingham, Washington, the company has an impressive wealth of expertise and experience, as well as a solid commitment to health and safety that is so crucial to the industry. Procon has estimated annual revenue in the neighborhood of C$162 million and employs as many as 1,200 people during peak times, many of them deployed to remote mining camps where materials and equipment must be flown in because road access is limited. Many mining companies large and small prefer to use mining contractors as a way to drive down the cost of mine preparation and operation, drilling, and the extraction of metals. Procon offers services such as remote greenfield project startup, mechanical and electrical installations, and mine project management, as well as underground mine design, estimating, and engineering; engineering services, such as short-term and long-range planning; conceptual mine design through final design; due diligence reviews; underground mine planning; budget preparation; optimization studies; surveying;
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Procon Group
The Amalgamated Mining Group The Amalgamated Mining Group is a privately owned group of companies based in Edmonton, Alberta. Established in 1990, we pride ourselves on our sales and service relationships to the industry. The Amalgamated Mining Group is proud to be a major supplier to Procon, providing both underground and surface mining equipment along with new and aftermarket parts and components. The Amalgamated Mining Group also provides drilling tools for all rock drilling applications.
ground support techniques and applications; and project management and execution. The company also provides heavy equipment services, such as repair, rebuild, modification, evaluation and overhaul services to the mining, industrial, construction, pipeline and forestry industries; conversion and upgrade of heavy equipment; and design and manufacture of custom equipment for specialty applications. Additionally, it provides expertise in custom designing electrical systems, equipment wiring harness manufacturing, and providing electrical AutoCAD schematics, as well as in providing welding and fabrication services. The company also offers infrastructure services, such as temporary and permanent infrastructure; concrete and foundations; building, support and platform steel services; mechanical and process equipment installations; tank, vessels, breaching and ducting; pressure, process and service piping; shaft works; and demolition, disassembly and crating. Procon has several projects and ongoing contracts currently under way, one being the completion of a 400-meter (1,300-foot) tunnel requiring a tap into Tyson Lake, an alpine lake approximately 3,000 feet above sea level at the Tyson Creek hydro-electric plant in Narrows Inlet, BC. Lake tapping is a blasting method that blows an intake into a body of water from below the water surface and is done without first lowering the surface of the water or installing a protective cofferdam around the tap hole. Lake taps are done by first excavating a tunnel almost to the water/rock contact point, and then blasting
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Procon Group
out the final protective rock plug all at once to allow water to suddenly flow into the tunnel from the lake. The Tyson Creek project will provide 9.3 megawatts of power capable of supplying electricity to over 5,500 homes. The tunneling project was completed by Procon and the plant was commissioned in January 2010. Alexco Resource Corporation, owner of the Bellekeno Mine construction project, awarded the mining services contract for the project, including development and production mining, to a joint venture between Procon and the Nacho Nyak Dun Development Corporation (NNDDC) in March 2010. The NNDDC was established in 1996 to develop economic opportunities and jobs for the First Nation of Nacho Nyak Dun Tribal State. Progress at the Bellekeno Mine is over 70 percent complete, which includes surface infrastructure, mine development and underground services. Owing to their commitment to health and safety, Procon, together with NNDDC, has operated the project
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Procon Group
without a time-loss accident since its inception. Another of Procon’s ongoing mining contracts is with the QR Mine near Quesnel, BC, which was acquired earlier this year by Barkerville Gold Mines Ltd. of Vancouver. The mine has achieved full production, pouring its first doré bar of gold on September 8, 2010. Procon is the mining contractor on an ongoing basis and will be responsible for the development, construction, production, operation and maintenance activities at Barkerville’s mines and mills. In conjunction with Barkerville management and project supervisors, Procon will also be providing facility management, engineering, and permitting functions for the company’s various projects. Although the economic downturn has slowed many of the industries that Procon helps supply, there are some benefits, including lower fuel and equipment costs and a more abundant supply of labor, which means the company can choose the most experienced and qualified, which in turn enables crews to do more work in the same amount of time. www.procongroup.net
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An
interest New Yorkers have long clamored for an alternative to the usual overcrowded commute into Manhattan. At long last, 75 years after it was first planned, the Second Avenue Subway project is under way and there is light at the end of the tunnel—well, almost
A
ny construction project taking place in New York City is fraught with complications. The sheer intensity of the city, with its 8 million residents and seemingly constant flow of traffic, makes road closures difficult to coordinate, while space is at a premium. Imagine then the challenge of finally bringing to fruition a project that upon completion will have cost in the region of $17 billion and was originally planned more than 75 years ago. It’s a project that will finally build the Second Avenue Subway comprising more than 8.5 miles of construction and potential disruption. It’s a job that requires patience, accuracy, skill and experience—and the various authorities involved in the process turned to Swedish construction skills courtesy of Skanska, part of a joint venture known as S3 Tunnel Constructors.
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Skanska USA / S3 Tunnel Constructors Second Avenue Subway
n boring OCTOBER 10 www.bus-ex.com
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Skanska is a multinational construction and development company based in Sweden. One of the world’s largest construction companies, Skanska entered the US market back in the early 1970s and has amassed vast experience, recently completing the new Meadowlands Stadium for the New York Giants and Jets, operating as construction manager for Madison Square Garden’s renovation project, and being involved in the restoration of the Ground Zero site in Lower Manhattan. Originally proposed back in 1929 as part of a massive expansion of the Independent Subway System (IND), the Second Avenue Subway project became a victim of the Great Depression. However, after World War II Manhattan’s East Side underwent continual residential expansion, and by 1995 MTA New York City Transit began its Manhattan East Side Alternatives (MESA) Study. The MESA Study goal was to recommend a course of action to reduce overcrowding and delays on the Lexington Avenue Line—the most crowded line in the US—and to improve mass transit accessibility for residents on the East Side of Manhattan. Ultimately the study decided that a new Second Avenue Subway project would help to ease congestion. Upon completion the project will include a two-track line along Second Avenue from 125th Street to the Financial District in Lower Manhattan. It will also include a connection from Second Avenue through the 63rd Street tunnel to existing tracks for service to West Midtown and Brooklyn. Stations will have a combination of escalators, stairs and, in compliance with the Americans with Disabilities Act, elevator connections from street level to station mezzanine and from mezzanine to platforms. Following a long period of consultation and research, the Second Avenue Subway Final Environmental Impact Statement (FEIS) was published in April 2004, and by July that year the Federal Transit Administration (FTA) issued a Record of Decision that stated that the requirements of the National Environmental Policy Act had been satisfied for the Second Avenue Subway project. That same month saw the completion of preliminary engineering for Phase 1 (which will comprise two miles of tunnel and three stations), with the three further phases completed by December 2004. In April 2006 the FTA authorized the MTA (Metropolitan Transportation Authority) to begin final design of Phase 1 of the project, and the final design contract was awarded.
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Skanska USA / S3 Tunnel Constructors Second Avenue Subway
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Skanska USA / S3 Tunnel Constructors Second Avenue Subway
Rebco Contracting Corporation Rebco Contracting Corporation specializes in material removal: everything from exporting masonry materials, contaminated soils, water treatment residuals, clean blast rock and mole rock. Rebco is involved with some of the largest projects in the NYC/NJ Metro area moving bulk volume. Rebco also imports materials such as sand, stone, clean fill, etc. We pride ourselves on our over 20 years experience and relationships and our impeccable safety and performance record.
We feel fortunate and proud in these
tough economic times to be working with S-3 Tunnel
Constructors
(Skanska)
on
such
a
valuable community project,kanska and we value Skanska’s professionalism and understanding of our needs as a subcontractor.
Then in March 2007, the first construction contract for Phase 1 of the Second Avenue Subway was awarded, with the official groundbreaking ceremony taking place on April 12, 2007. In April 2010 S3 Tunnel Constructors, a joint venture comprising Skanska USA Civil, J.F. Shea Constructors and Schiavone Construction, finalized plans to begin tunneling on the new $337 million, 1.5-mile twin-tube section from 96th Street to 63rd Street, part of the Phase 1 project, which is costing $3.8 billion. The East Side Access project, which will bring thousands of Long Island Rail Road commuters into Grand Central Terminal by 2016, will increase the ridership on the overburdened Lexington Avenue Line and is certain to further the lower portion of the Second Avenue Line project (Phases 3 and 4) for East Side subway service. A number of different methods will be used to tunnel for 8.5 miles underneath Manhattan, with up
to 90 percent of the tunneling utilizing a tunnel-boring machine (TBM). The subway will be built with deep bore tunneling methods, avoiding the cumbersome utility relocation and cut-and-cover methods of past generations that made subway building disruptive for New York’s busy traffic, pedestrians and store owners. Only the stations will use cut-and-cover construction. Efforts are underway to minimize the impacts of this construction. The 800-foot-long, two-story-tall tunnel-boring machine had originally been expected to arrive six to eight months after construction began, but the utility relocation and excavation required to create its “launch box” delayed its deployment until May 2010. The TBM launch box is now complete, and on May 14, 2010, MTA’s contractors completed the TBM installation and turned it on at the 96th Street location. For boring, a trench will be dug from 96th to 93rd Streets; the TBM will be placed in the ground at 92nd Street and will bore southbound, connecting shafts at 86th and 72nd Streets, which are to be sunk as starting points for subway stations. The machine’s 200-ton cutter head is dressed with 44 cutting discs to combat the hard rock conditions found along the alignment. (The TBM is no stranger to the ground it will encounter; it was constructed roughly 30 years ago, when it was used to bore the 63rd Street tunnels.) It will dig approximately 50 feet of tunnel per day, until it reaches the BMT 63rd Street Line, where it will then be backed out and placed in the parallel tunnel to bore the second tunnel to 63rd Street. The drill is placed on a track where an array of hydraulic pistons presses it forward, with the resulting stone debris (called slag), collected through a set of channels on the drill’s face and ferried on conveyor belts to the rear of the machine. Progress will be methodical rather than rapid, and tunneling work is expected to be completed in November 2011. Even so, this method is much faster than the traditional method of using dynamite. Seventy-five years in the making, many billions of dollars of investment and several false dawns have not deterred the likes of Skanska, and the project in many ways symbolizes New York’s indomitable spirit. The new line will operate from 125th Street to Hanover Square and at present the official opening that New Yorkers have so long waited for is scheduled for 2016. www.skanska.com
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By securing a long-term contract to provide terminal wheelchair service to London’s Heathrow Airport, Air Serv Corporation has enhanced its already solid position as a global leader. Keith Regan learns how the company plans to leverage its experience and turn Heathrow into a model for using technology and operational excellence to further enhance service while driving down costs
F
or at least the next five years, Air Serv Corporation will be the exclusive provider of wheelchair services to every commercial airline flight in and out of London’s Heathrow Airport. The contract—the largest of its type ever awarded—represents a major win for the eight-year-old Atlanta company, which is vowing to use it as a platform to create a new model for efficiently and costeffectively providing such services, a model that could over time be duplicated in airports around the world.
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Sett
so
new
Air Serv Corporation
ting
sights on
w heights
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Air Serv Corporation
Sprint Sprint understands that your industry has unique business needs. That’s why we offer you and your business tailored solutions for streamlined communications, data access, mobile productivity AND we now offer 4G, the next generation of hyper-speed. As the first wireless 4G network from a national carrier, you can download up to 10 times faster than 3G. It’s faster than anything wireless from AT&T or Verizon. 4G has several cost and performance advantages that put Sprint ahead of the industry, giving you and your business a competitive advantage. It’s more than a wireless network; it’s a wireless revolution!
Air Serv is already the leader in the category, which it helped create when it was founded in 2002, operating wheelchair services in 12 of the 30 busiest airport markets worldwide, including five of the top eight and—with Heathrow, Atlanta’s HartsfieldJackson and Chicago’s O’Hare—all of the top three. “What we leveraged to win that contract is a proven system that relies on technology and that greatly enhances productivity,” says Air Serv’s chief executive officer, Thomas Marano. Air Serv was founded shortly after the terrorist attacks of September 11, 2001, ravaged the commercial airlines, which actively sought an outsourcing partner with the expertise to handle support services, providing handling and cleaning services as well as delivery of passengers who need assistance to and from terminal gates. The Heathrow contract represents an emerging opportunity because the airport provides all ground-based wheelchair services to all airlines—a model that is now required by law in Europe and has the support of airlines in the United States as well. The contract runs for five years with options that could extend it to seven and from the outset could mean as much as $15 million to $20 million in new revenue for Air Serv, which did about $200 million in
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Air Serv Corporation
Valiant Workforce Management Solutions Valiant
supplies
comprehensive
time
&
attendance, scheduling, payroll and HR solutions to more than 1,000 clients and is a recognized leader in the industry. For businesses having many hourly employees with varying rates of pay, multiple locations, mobile workforces and complex scheduling requirements, our workforce management
software
reconciles
employee
hours worked with hours paid and billed, in one integrated application.
business in 2009, when the company grew at a 35 percent clip despite the economic recession. Air Serv’s approach uses a centralized dispatch center, a workforce that is equipped with handheld devices, and a work order management system that directs employees between assignments in the most efficient way possible. Just as a shipping firm can cut costs by better orchestrating the logistics of its fleet, Air Serv can cut costs by providing equal or better service with fewer workers, and therefore
at a lower cost. “Our system allows us to create significant productivity enhancements while meeting the quality standards of our clients,” Marano says. The same model is used when Air Serv handles cargo or performs plane-cleaning services, with data gathered from the field in real time able to be analyzed and tracked to assess efficiency and productivity and to enable a higher level of service quality to be achieved. “We believe we have innovated a better model,” Marano says, adding that worker productivity has been shown to improve by as much as 15 percent using its approach. “We undergo quarterly business reviews with senior operators at all the global airlines, and we strongly believe that our disciplined, datadriven approach gives us the ability to increase our business with all of them if we perform well.” Long-term demographic trends suggest growth in the number of passengers who will require wheelchair assistance while traveling. “There’s definitely a higher penetration rate in terms of the percentage of mobility-impaired passengers per plane,” says Marano. At the same time, airlines and airports are favoring consolidation, recognizing the waste associated with each airline using its own employees or with employees provided by security contractors
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waiting until a wheelchair call is made. “We really have a very exceptional demand forecasting system that enables us to directly connect with airlines and look at both flight schedules and passenger load factors to better plan the labor force,” Marano says. “That better first step means better operations.” Because every worker’s actions are captured electronically, Air Serv is able to re-plan constantly, updating forecasts in real time. “This solution didn’t exist prior to us. We developed and commercialized it. The reason it works so well is that the actual operators of the service used technology to create it, versus a software developer who has no operational experience designing an app.” Looking ahead, Air Serv is at work with a client on a plan to create a single call center that covers all of its airport hub locations, rather than a center at each site. “That is something we are looking at carefully and are optimistic that it could become an even bigger competitive advantage.” As it focuses on continuing to grow its core business, Air Serv relies on strategic partners and
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suppliers to handle key administrative functions. For instance, to handle payments and benefits for its fast-growing workforce—the company grew from 35 employees to more than 9,000 in the span of about seven years—Air Serv works with Valiant Workforce Management Solutions. Growth continues, with as many as 500 new workers to be brought on board for the Heathrow account and overall as many as 2,000 more people being hired in the next two years. All those workers will be trained extensively in safety and customer satisfaction, with the company regularly awarding employees who perform exceptionally, and its Web site features stories of wheelchair service professionals who have gone above and beyond the call of duty in their workdays. That service excellence, when combined with productivity gains that help keep costs down, is the key ingredient in the company’s recent success. “The bottom line is that in the world’s toughest industry, in its toughest period of time, and in the global economy’s toughest period, we’ve been a growth business,” Marano says. www.airservcorp.com
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Well-established cargo carrier Evergreen Internationa resting on its laurels—it’s using corporate introspectio efficiencies for the future, David Hen
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Evergreen International Airlines
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vergreen International Airlines, located in McMinnville, Oregon, just outside Portland, was founded in the 1920s as Johnson Flying Service, and today it holds the oldest air operations certificate in the US and has a fleet of ten Boeing 747 cargo freighters. Evergreen’s largest client is the Department of Defense, comprising about 40 percent of the company’s revenue, “carrying everything from beans and bullets to military vehicles and equipment, whatever the Air Mobility Command requires,” says Jim Dineen, Evergreen’s vice president of special operations. “We’ve been with the Civil Reserve Air Fleet program since its inception in 1952, which for us is an on-call commitment, and we’re proud of our participation there.”
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The remainder of the company’s business is civilian or commercial freight forwarding, mainly for consolidators, and mainly carrying between Asian markets and the US. It also receives calls from individuals wanting to move anything from racehorses to expensive cars or yachts.
opportunities that you may be leaving on the table with the fact that the peaks will go away and you’ll be left with some very expensive capital assets and payroll to meet.” Another major challenge is planning for the future. “A company that has been around as long as we have
“If you need something done with an aircraft, from developing it to employing it and supporting it, we can do that. We have some licenses that other aviation companies don’t have” Technically, Dineen points out, Evergreen is a Part 121 supplemental air carrier, which is a specific category of charter, and carries all cargo. “We’re not doing any passenger service as we have in the past. But we’re the only full-spectrum aviation company—we have a ground handling company, a heavy maintenance modification center, airline maintenance, a helicopter company and a 3PL support company, so we’re agile. If you need something done with an aircraft, from developing it to employing it and supporting it, we can do that. We have some licenses that other aviation companies don’t have. We’ve had some interesting programs, with Boeing, for example, on the large cargo freighter, as well as our own, internal 747 Supertanker fire fighter that we built and certified.” Most of Evergreen’s commercial business is moving freight out of Asian markets to the US, and recently there has been a decent increase in the “back-haul” business out of the US to Asia. Evergreen is increasing its presence in Chicago and New York with freight going to Shanghai and Hong Kong, and also maintains a presence with Nagoya, Japan. Currently Evergreen is expanding its fleet to about 15 aircraft by retiring its older freighters and adding new, more efficient planes. “The problem with an airline meeting its requirements is that a 747 and its related peripherals is an enormous investment, so you have to know which way the market is going,” Dineen explains. “Just adding an additional crew requires a four-month lead time. So to add six full crews, which means 12 to 18 pilots, you need to get them through the pipeline. You have to level out the peaks and balance the
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tends to become not exactly complacent, but we think we’re doing well where we are. What I’m pushing for right now is a lot more corporate introspection: what we’re doing and how we work together. Many of us have been here for upward of 30 years, so we bleed green. We’re dedicated, cross-functional people, kind of a lean, family-like company.” Dineen notes that they always meet whatever challenges they face, but he wonders whether they’re getting the best out of their talent and motivation—are they using it as efficiently as they can? “Business environment analysis has to be continuous,” Dineen says, “and we need to look at a two-to-five-year range when we look at capital assets, as to which way the market’s going, where we want to penetrate and what kind of contracts we can pursue. We need to look at our strategic planning, then take it back in an introspective way to look at our near term, what I call tactical planning and structure. I should be able to go to anybody in the company and ask what that person thinks this airline will look like in two years, in five years. If I can’t get an answer, then I’m not doing my job as a leader. Everybody in the company needs to be able to say where we’re going, what we’ll look like, what size we’ll be and what kind of work we’ll be doing. “For example, I’m currently doing airline planning,” he continues. “We’re an ad hoc charter carrier, classified by the Federal Aviation Administration as a specific type of carrier, not a flag carrier or a scheduled carrier. People tend to look at that and say that’s what we are, it’s the business we’re in. Basically, it’s accepting a business model or label that’s then applied to us externally. But it’s not necessarily so. How much
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“You have to level out the peaks and balance the opportunities you may be leaving on the table with the fact that the peaks will go away and you’ll be left with some very expensive capital assets and payroll to meet” of what we do is actually known? Surprisingly, in a somewhat volatile market with downhill trending in our Department of Defense work and uphill in our Asian business, it turns out that more than 80 percent of what we do is known a good 90 days ahead—actual days of flights and the cargo. “So despite what label we may have,” adds Dineen, “if the actual environment is 90 days out, then are we using the tools and procedures and the structure to operate the way we actually are, not the way we’re labeled? To that end we’re evaluating some longer-range planning software, and we’ve joined with JetBlue; they’re helping us with benchmarking and how to use the tools. It’s
different for us, and it’s working well.” Dineen summarizes, “In this business we tend to look at profit and loss, payroll and revenue, and it’s easy to get stuck in data points. My job is linking more of our goals and the trends back to the data. My advice to anyone in a volatile business is: make sure you’re capable of expressing the more theoretical, long-term strategic views of what you want to do and where you want to be, and bring that back through the data while keeping your eyes on the trends. Make sure everybody’s involved in knowing how they’ll support it. And keep everyone enthusiastic.” www.evergreenaviation.com
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Grupo Aeroportuario del Sureste (ASUR)
orcoffee?
en seen as a money-raising rnments selling off national e experience in Mexico with by Grupo Aeroportuario del ws that performance can be nced, as Alan Swaby learns
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aving just returned from a vacation in Italy, the timing to write about airport management couldn’t have been better. Once past security checks, the airport coffee and sandwich were very enjoyable. It’s just that the coffee had to be collected from different halves of the same concessionary—two lines plus a third line to pay, which, by the way, you do before ordering. No, it doesn’t make sense, but it’s what happens. Then the only two flights leaving at that precise time of the day were arranged to embark from adjacent gates that shared the same access stairway. No, that doesn’t make sense either, but it’s what happened. The chaos getting through the various checkpoints or the 20-minute wait on the tarmac wisely won’t even be mentioned. And all this from a newly built terminal.
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One thing is certain: the airport in question won’t be winning any accolades from Airports Council International (ACI), the Switzerland-based organization whose role it is to measure passenger satisfaction at 130 airports worldwide. The Mexican airport at Cancún, on the other hand, has just got a nice pat on the back: best airport in Latin America and third-best in the entire world. Not bad for a vacation airport with a geographical monopoly. “We want our passengers to be happy,” says Adolfo Castro Rivas, CFO and strategic planning officer for Grupo Aeroportuario del Sureste (ASUR), the management company behind Cancún and eight other regional airports in the far south of Mexico. “When customers are happy, they spend money with the airport concession holders, and this makes more profit for us. It’s a win-win-win situation.” If you had traveled to Cancún in the 1990s, you might have thought you were in Italy. At the time all Mexican airports were government controlled, and once having fulfilled their obligation of putting the buildings and runways in place, the bureaucrats running them quite frankly switched off. “There was no incentive to provide good service,” says Castro. “It didn’t make any difference whether the airports made money or not. Airport budgets were a function of the overall country’s economy.” Ironically, change came about when the country ran out of cash. With more votes to be had by building hospitals rather than maintaining airports, matters just got worse until the point—10 years ago—when they went private. The country’s 35 airports were divided into four parcels and invitations to bid sent out to professional airport managers around the world. Copenhagen Airport, with three other international partners, formed the investment consortium ITA and won the bid for the smallest parcel of nine airports. ITA held 15 percent of the equity in ASUR, and the other 85 percent was sold on the stock exchange in two tranches. With a business that had been starved of investments of any kind and manned by a workforce that couldn’t even be sure that maňana was possible, ASUR had a job on its hands instilling the concept of service to those on the payroll. “Not only have we turned direct airport employees around,” says Castro, “but these days we also undertake to train—at our expense—anyone who works at any of the airport concession holders. But as the ACI survey demonstrates, it has more than paid off.”
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ASUR’s contract with shops and food outlets operating within the terminal building is that they pay a nominal ground rent plus a percentage of their turnover or a fixed amount per passenger, whichever is greatest. As such, Castro knows down to the penny how much passengers are spending as they wait to fly home. He inherited a situation where the average spend was just $0.70 and has grown that to an average of $4.50. At the same time the number of passengers in Cancún Airport has increased from 7.1 million to 12.7 million. All this is reflected in the share price, which was $15 when first floated and is now $47. ASUR has also put order into the way the airports are to develop. Previously they had grown wild, without plan, structure or direction. Each airport now has a master plan that maintains order and optimum traffic flow, now and into the rest of the 50-year franchise it holds. More than $500 million has been invested so far in bringing the airports into the 21st century. The jewel in the group’s crown is Cancún, which handles around 450 flights a day compared with a total of 300 flights through the other eight airports. Of the 15 million passengers a year that ASUR handles, 13 million go to Cancún. Of these, 75 percent are international travelers, 75 percent of whom come from the United States—travelers not known for their quiet acceptance of shoddy service. As we approach ASUR’s 10th anniversary, all its initial targets have long been met. A complete overhaul of all procedures has seen a transformation of how the business is run. Outside, safety-critical considerations were the first to be attended to. Runways, lighting, access and parking have all been given the treatment. To save airline operators money, time and distance spent taxiing have been reduced while schedules have been organized to minimize waiting time for planes. In no-frills fashion, ASUR’s airports can turn airplanes around in 20 minutes. When passenger volumes look as though more than eight minutes will be spent in line, more staff are brought in and more lines opened. “And yet we have a total workforce of just 800,” says Castro, “including head-office personnel. It is done by good planning of multifunctional teams.” It’s a good bet that the coffee in Cancún will never match that of the Italian airport, but in all other respects ASUR is showing many much longer established operations how things should be done. www.asur.com.mx
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iRely
Commodities markets can be notoriously volatile thanks to a blend of fluctuating prices and operational pressures. One solution that manufacturers are increasingly turning to is iRely, an innovative software company. Sudhakar Kaup, vice president at iRely, talks to Andrew Pelis about how the company gives manufacturing companies an edge
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he world of commodities is an ever-changing mass of fluctuating prices and new production techniques. When Harris Tea Company, the largest private-label tea packer in the US, needed a fresh approach to its IT integration, it turned to iRely. iRely has an impressive client base of 380 customers located across 12 countries. Its innovative software is increasingly gaining a solid reputation for improving margins wherever a commodity business is in trading or production mode. iRely has a solid knowledge base built around its software design, as Sudhakar Kaup, vice president, explains. “We designed a solution to a problem but did so over a period of 10 years, utilizing the vast knowledge base of experienced commodity companies. “Essentially, iRely helps to improve quality management systems at every step,” Kaup continues, “from receiving the commodity into a factory, blending different ingredients, packaging and distribution.” One of the first benefactors of iRely software has been Harris Tea, based in Moorestown, New Jersey. The company, part of Harris Freeman, provides private-brand tea programs for the vast majority of retail and wholesale grocers, specialty food stores, drug chains and mass merchandisers nationwide. “Harris Tea doesn’t grow tea itself but has cultivated relationships with suppliers in key growing regions for its supply,” states Kaup. “It primarily operates within the private-label market for tea and is the largest company of its kind in North America. It concentrates on distribution into the retail and food service sectors, and despite the general economic downturn, its business has proved relatively stable as consumers have become very value-sensitive.”
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iRely
With three sites situated in New Jersey, California and Georgia, quality is of paramount importance. Using iRely software has enabled the business to manage quality throughout its entire supply chain, as Kaup explains. “We have an extensive quality engine built into the iRely system that covers everything, and from the moment the first vendor sample comes in, it is captured and tracked at every step through to pre-shipment, shipping, blending, packaging and distribution. Everything is completely traceable, from farm to fork, which is crucial in today’s regulated environment.” The Food and Drug Administration (FDA) plays a vital role in regulating America’s food and drink industry, and iRely has to comply with stringent FDA checks (including good manufacturing practices) before it can be offered to commodity businesses. So what was the catalyst for iRely’s development? Kaup and colleagues had previously worked extensively within the commodities sector in various IT roles and had seen a software focus on front-office automation only, which was great for accounting and sales but did little to enhance operational excellence on the shop floor. Kaup takes up the story: “We saw that most companies focused on typical ERP systems that did not distinguish from the issues prevalent for manufacturing companies who were into commodities. For those businesses there are two distinct parts, and aside from the front office, there is a strong emphasis on manufacturing. “Because challenges associated with procurement and manufacturing of commodities are unique,” he continues, “it requires a different kind of risk and quality management to work effectively. We felt that there were no software packages around that helped to create operational excellence on the shop floor and came to that conclusion after evaluating lots of ERP systems that simply could not manage the commodity side. “We were able to leverage the vast knowledge base of leading commodity experts to create a system for the plant floor that is able to manage risk from commodity price fluctuations through all the key processes associated with procurement of the commodity and the entire production cycle. We developed iRely software over a 10-year period. Harris Tea went live with the system a couple of years ago across all its locations,” Kaup concludes. The system is ideal for companies that have
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already adopted lean manufacturing techniques, and Kaup says that part of its attraction is the ability to have information readily available at any time. “Right now, using iRely, I can go into any factory using the system to view each production line and to monitor efficiencies (including shrinkage) in a real-time environment. At Harris Tea, the introduction of iRely systems has really changed the culture in the business.” One of the biggest factors of iRely is the ability to trace product back through every phase of the process. The system provides the ability to trace the finished product from the store shelf backward all the way to the vendor that the commodity lot was procured from. This helps ingredient identity for both branded and private-label companies (whose customers trust them with their brands). “Private-label packers like Harris Tea take the responsibility of protecting the brand name of their customers very seriously,” Kaup comments. “We can tell by picking up a box off a store shelf and typing in a code exactly which tea went into which box, where it was procured from and where else the tea went, just from a few computer clicks.” That ability is perhaps best exemplified by the complex world of tea production. Often, different teas arrive at a factory from around the world. They are combined in the blending process, so it can become a challenge to keep track of which batch of which tea went into a product. “The normal ERP package cannot handle this complex blending function, and a key function for any commodity business is mixing ingredients. The same tea hailing from the same estate in two consecutive years may produce differing qualities, and these companies have to be able to produce consistency, which the customer has come to expect,” Kaup explains. “iRely helps to manage that blending and recipe management and can take into account any substitutions as well as quality.” Kaup suggests that iRely software has been designed specifically to serve manufacturing businesses that have commodities as a core. “If that commodity needs futures, such as sugar, coffee or cocoa, we have a futures management module available to help the business manage risk. It gives a company a real-time view into its combined physical and futures position, thereby providing the vital look at prospective profit and loss that can be invaluable,” he asserts.
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iRely software aims to enhance visibility, productivity and efficiency. It provides a live scorecard of a commodity trading and manufacturing business facilitating better management of volatility inherent to the commodity business. One-time data entry into the system generates a variety of useful reports and alerts through which a commodity business can manage its operations more efficiently. Kaup says that in the event of recalls, the system’s traceability technology reduces days of work to a mere few clicks on a computer. iRely software enhances visibility of the commodity throughout the manufacturing process. It is designed to mimic operations on the shop floor, providing real-time inventory tracking, including work in process, integrated lot traceability, yield management and integrated quality capture at every step of the process. So what does the future hold for this futuristic software company? “We have over 125 employees today, and up to a dozen of us are heavily involved in trading and shop-floor operations discussions with business. We’re always learning new things and strive to introduce greater operational excellence into iRely. Each year we introduce new upgrades and ideas for our customers,” Kaup says. “Commodities have always been around and always will be. It’s just that we’ve found more and more innovative ways to package them. With greater innovation is the challenge of operational excellence, and that’s where iRely is able to help business.” www.irely.com
iRely
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Genera Energy focuses on advancing biomass-fuels technologies that could help alter the economics of non-food biofuels. Now the University of Tennessee spinoff is developing a first-of-its-kind Biomass Innovation Park that it hopes will become a model for the rest of the country, as Keith Regan discovers
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enera Energy LLC was formed in 2008 by the University of Tennessee Research Foundation with a goal of helping to advance the research and commercial development of the emerging cellulosic biofuels industry. Originally founded to carry out the university’s $70.5 million biofuels initiative, Genera has struck commercial partnerships, forged supply contracts with farmers and helped create a farmer-owned biomass supply cooperative. Genera and industry partner DuPont Danisco Cellulosic Ethanol (DDCE) have a demonstration-scale cellulosic ethanol biorefinery in Vonore, Tennessee, a plant that is fueled today by corn cob and stover and is designed to operate on switchgrass and other biomass feedstocks. Over the next several months the biorefinery will begin operating on switchgrass produced on 6,000 acres in East Tennessee. That partnership is aimed at leveraging DDCE’s cellulosic ethanol technology—considered among the world’s best—and the university’s world-class expertise in cellulosic feedstock production and research. With a capacity of 250,000 gallons of cellulosic ethanol annually, the plant went into operation in late 2009. Now, with an eye toward demonstrating the best methods for handling, storing and preparing that biomass to become fuel, Genera has broken ground on a Biomass Innovation Park on property surrounding the demonstration-scale biorefinery, a project aimed at testing and developing methods of using biomass feedstock to create biofuels, biochemicals, bioproducts, biomaterials, biopower and bioenergy.
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“There are a lot of things that need to happen, from storage and conveyance and handling to grinding, milling, densification, characterization— all these things affect the cost of biomass,” says Genera president and chief executive officer Dr. Kelly Tiller. “This park is designed to demonstrate and scale up all the processes, systems and operations that will be used between producing energy crops on farms and using them in downstream applications.” Cellulosic biofuels can theoretically be made from any plant material but, unlike corn-based fuels, require additional processes before the fermentation that creates fuel for use in automobiles and other energy settings. The approach is often seen as a key piece of a larger energy-independence puzzle by using readily available, sustainable and fast-growing low-input plant materials for fuel, avoiding the need to divert energy-intensive raw material that could otherwise find its way into human or animal food supplies. Besides the additional processing steps, another economic limitation of cellulosic biomass is the sheer bulk of the raw material used. Whether it’s switchgrass, corn stover—what’s left over after the corn itself is removed—or biomass from trees, “this material is not easy to transport and handle,” Dr. Tiller says. “We think we can develop a model of how to use a value-adding aggregation point for material from the surrounding area that will help improve the economics of the approach even more.” Over time, the Biomass Innovation Park can serve as a template for replication in areas near
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farms that are producing the biomass fuels, Dr. Tiller says, creating a distributed network of such facilities that reduces the need to transport bulky material over long distances. The Biomass Innovation Park sits on about 33 acres in Vonore and is anchored by the demonstration-scale biorefinery, which began operations in January 2010, processing corn cob. In late 2010 the biorefinery will begin using switchgrass from local farms with which Genera has supply contracts in place. Infrastructure planned for the park includes material receiving, two silos with conveyance apparatus and tunnels, areas for storing baled material, a processing building, other maintenance, service, and office buildings, and field areas for growing demonstration crops. The first phase of the park buildout will focus on basic infrastructure needed for handling, storing and pre-processing the biomass. The site plan contemplates future expansion for analytical laboratories and to demonstrate other conversion processes. In the fall, as much as 20,000 tons of switchgrass will be harvested in a short time frame, material that will need to be brought into the park and stored before processing can begin. Laidig Systems is supplying the switchgrass truck receiving stations and storage silos. At the same time, Genera will also use the park to carry out a $5 million Department of Energy grant awarded to explore a high-volume bulk handling system for switchgrass. Most such material is currently baled for transportation off-farm, and a bulk approach could cut down on costs. Over time, the park will continue to evolve and expand, Dr. Tiller adds. “We see this having a long useful life as the place where all things are integrated with as much flexibility as possible, including the ability to look at a range of other feedstocks with an eye toward figuring out the best approaches for each of those as well.” The park model could be especially well suited for farmers’ cooperatives, in which groups of farmers band together to create a central place to store and process their bulk raw material and get it into the processing stream as quickly and efficiently as possible. “They could use this model to add value to their crops prior to it moving downstream. That’s one way this could work.”
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Genera Energy LLC
Laidig Industrial Systems Laidig Industrial Systems provides raw material storage silos and reclaim systems. The Laidig system
provides
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control while supplying a well-blended product when extracted from storage. This allows for the material to be fed to further processing at a controlled rate, eliminating power surging with process equipment down line. The net result is a lower production cost and a higher net return from the process. In the years ahead the Laidig system will return its investment many times over. Low operating and maintenance costs and safety are keys to a successful operation.
Plans call for the first phase of the park to be completed by the end of 2010, with additional development unfolding over time. Although the park is meant to test and demonstrate processes and help prove the economic viability of the technologies involved, Dr. Tiller believes the time for cellulosic biofuels is now. “We have enough information now about the technology and the economics to suggest that this is not a future dream; this is ready now,” she says. “Of course, there are areas where we could see improvements and efficiencies that could be gained, and those will happen over time. But this is not something off in the distance. We’re ready to scale this up now. When you take all this work together, it serves as very strong validation of an integrated approach that takes material all the way from the farm to the filling station.” www.generaenergy.net
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The Linbeck Group
Adopting change
Winston Churchill said, “To improve is to change; to be perfect is to change ften.” Rob Harris investigates the Linbeck Group, a company that has adopted innovation as one of its organizational core policies and has included in its journey new tools and processes through “Virtual Design and Construction”
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hange is inevitable. It’s part of our daily lives and affects everything we do. Basic human nature invokes the fear of change in some, while in others it’s accepted as an everyday fact of existence. Businesses that understand the concept of change management—and incorporate this fact of life into their organizational strategy—tend to become stronger and better equipped to handle the challenges that lie in the future. One such company is the Linbeck Group, headquartered in Houston. Linbeck is a privately owned company providing a wide range of construction services including construction management at risk, design-build, competitive sealed proposals, and other project delivery methods. The company was a founding member of the Lean Construction Institute and is known for its unique and collaborative approach to its projects. Linbeck is currently the project manager/builder at risk for the new Cook Children’s Medical Center North Tower facility in Fort Worth, Texas. It is part of the hospital’s largest-ever expansion, encompassing over 700,000 square feet.
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The Linbeck Group
SKIHI Enterprises, Ltd. SKIHI Enterprises, Ltd. is excited to partner with the Linbeck team in the construction of the new North Tower Expansion at Cook Children’s Medical Center in Fort Worth. Our vast experience in health care construction along with our previous history at CCMC has combined to enhance the coordination processes required for a seamless installation. Our BIM detailers have worked tirelessly with the Linbeck group to provide a coordinated model that allows for a quality installation and as a maintenance tool for the owner once the building is completed.
Virtual Design and Construction (VDC) functions at Linbeck. South Cole, VDC manager for the company, explains, “BIM is the application of a relatively old technology that has been around in many different disciplines, such as the aerospace industry and car manufacturing. Construction has started to apply this technology in the last 10 to 15 years, and that’s what makes this application new—because it’s not widely accepted by the industry as a whole.” The BIM tools and processes work as the blueprint for the project, and they allow all project team members access to a 3-D architectural, structural, mechanical, plumbing and electrical— as well as several other disciplines—model of the project with all details and schematics. Cole explains, “BIM allows users to communicate
“The social aspect has been the most challenging but also the most rewarding aspect of this entire project for me. Seeing the integration and the communication increase between the teams has been incredible” This world-class pediatric center will have 158 new rooms with an emphasis on enhancing the patient experience and family-centered care. The project has a budget of $89 million and is scheduled to be open in June 2011. Here, Linbeck leads a horizontally integrated team that allows all consultants, major trades and the owner to collaborate in defining the optimal facility solutions. Integration reaches every aspect of the project team and is proven successful by the top-tier medical facility master plan built by Linbeck over the last 25 years, consistently on time, under budget and demonstrating the highest level of quality. Linbeck has never hesitated to adopt new processes that could help improve customer service and increase profits, and it was one of the pioneers in the CM at risk delivery method in the early 1970s. Today the company is once again embracing a change in the construction industry with the incorporation of building information modeling (BIM) into its projects. BIM refers to a set of tools and processes that are included in the
visually. It’s a new language for communication, problem solving and describing work in the construction industry.” As with any kind of change, sometimes it isn’t readily accepted. Throughout history management has always had problems with the adoption of new processes into a firm’s existing business models. The acceptance and understanding of BIM in the construction industry is no different. Cole talks about this problem, “Some of our trades are adopting quickly and adding incredible benefits—with better collaboration, development and coordination—and some are not. What we’re seeing is whether a contractor is going to be part of the cutting edge or whether it’s going to die out.” According to Cole, Linbeck is committed to BIM: over the next 12 months the company is expected to be using some aspect of virtual design and construction on every significant project it has. Cole continues, “A major part of my day-to-day job as VDC manager is bridging the gap between the different disciplines within the architectural, engineering and construction industries and then
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The Linbeck Group
finding the most mutually beneficial solution for team members to accomplish our end product. At the end of the day, my major goal is to optimize the work structure and eliminate as much waste and rework as possible.” Building information modeling focuses on greater project visualization, easier implementation with smoother project coordination, and a much higher level of planning with a more sophisticated offering of tools available. These tools can include 3-D modeling, which incorporates the geometry and physical drawings in a real-scale physical software model. However, with the incorporation of 4-D technology, the ability to factor time comes into the model. The project managers can get real data costs and schedule changes immediately or forecast potential problems of new ideas on the model. And 5-D modeling, though still realizing significant refinement, allows users to view and manipulate building components and systems and the related cost factors associated with a project. In a new-project environment—when there are 30 to 60 trade contractors with varying personality types all brought together, and with the necessity of having to create certain levels of interaction throughout the project’s lifespan—the challenge of integration can be overwhelming. Cole explains his views, “That’s my end goal with VDC, and with our company: to allow it to integrate product teams, which we do extremely
well already, but this is the tool and technology that will allow us to do so much better.” Cole continues, “You can teach anyone how to follow a particular process, but with social interactions it’s not really the same. You can’t teach it; you can’t write it down and have someone follow it. It has to be developed and grown, evolved and lived. The social aspect has been the most challenging but also the most rewarding aspect of this entire project for me. Seeing the integration and the communication increase between the teams has been incredible.” This age-old story has new characters and settings. There will always be some who resist new technologies and change and others who embrace it and move forward. The past is filled with memories of those companies that failed to accept the challenge to move forward and incorporate change into their organizational values. With the Linbeck Group, change is part of its corporate culture. History has shown that great cultures and great companies have always embraced the concept of change and look forward to the demands it can bring. “If you would attain to what you are not yet, you must always be displeased by what you are. For where you are pleased with yourself, there you have remained. Keep adding, keep walking, keep advancing.” —Saint Augustine www.linbeck.com
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RBH Group is poised to begin work on Teachers Village, a residential development in the historical center of Newark. Company president Ron Beit talks to Gay Sutton about his vision for kick-starting wider urban regeneration
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RBH Group: Teachers Village
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y the end of the year, construction is likely to begin on the first phase of a development plan that could breathe life back into the heart of the city of Newark, New Jersey. The city already boasts the third-busiest airport in the US, has a thriving port that provides container facilities for New York City, enjoys an excellent transport and educational infrastructure that includes a thriving university sector, and is home to some of the largest financial organizations in the country. And yet for many years its historic center has been slowly degenerating—its population dissipating and its architectural heritage decaying, to be replaced by parking lots. “I could never understand how devalued the central business district was in comparison with other business districts across the country, particularly given the inherent assets the city has,” explains Ron Beit, president and founder of Manhattanbased property development firm RBH Group. Beit had begun his real estate career in Newark before expanding nationwide. Having amassed an in-depth understanding of the city and its needs, he perceived a tremendous opportunity for urban renewal and began acquiring development properties in the heart of downtown Newark. “We came to understand two things. First, as Newark is a challenged credit environment, we would have to get creative in the way we were going to finance such a development here. And second, when looking at urban renewal projects that had succeeded in the short term elsewhere in the country, we saw that those developed exclusively for the luxury market had long-term issues,” Beit explains. “Good plans—and one only has to look to Manhattan with its million units of rentstabilized and rent-controlled housing stock preserved for middle income—need a strong middle income housing stock upon which to build.”
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RBH Group: Teachers Village
“Teachers commute into the city every day from all over the region and work very long hours. It was apparent to us that a middle income housing project for teachers would be very compelling” With a shrewd knowledge of the locality, it didn’t take long to identify a prime marketplace for the initial housing development. “There are 18,000 teachers working in Newark’s charter and public schools, universities and independent schools,” says Beit. “They commute into the city every day from all over the region and work very long hours. It was apparent to us that a middle income housing project for teachers would be very compelling.” Having acquired 32 contiguous parcels in the downtown core business district, Beit had a vision to construct Teachers Village, a combination of residential, retail and academic accommodation totaling about 360,000 square feet and costing some $120 million. The architectural plans are currently being drawn up, and since the location is in a historically significant area of the city, a great deal of careful attention is being given to reflecting the style and diversity of architecture that had originally characterized the neighborhood. The vision for the project is persuasive. “This project will, most importantly, be horizontal rather than vertical,” Beit says. “Rather than one big building in the middle of the business district, it’s a series of eight low-rise buildings that will completely transform the streetscapes of this neighborhood.” Six of the eight buildings will contain rental apartments over retail space and will be marketed exclusively to teachers. The remaining two buildings will house three charter schools and a gymnasium, again over retail. A variety of unique amenities are being incorporated for the residents, including classroom spaces equipped with computers that can be used for out-ofhours teaching and for personal study, while the gymnasium is designed to be used by the schools during the day and as a sports club for the community after hours and on weekends. Sadly, many of the original historic buildings have long since disappeared. Around 91 percent of the land is currently used as surface parking lots, and the remainder consists of dilapidated properties, most of which have long been abandoned. “That’s why this project will be really important, because we can do something to restore the historic context of this neighborhood,” Beit says. To ensure that the
diversity of the original architecture is reflected in the new buildings, he has appointed four different architects to design the project. Plans for the retail element of the development will be crucial to the successful regeneration of the area and will be aimed at attracting a mix of people. With the 200,000 city residents boosted by another 80,000 employed there during the week, 50,000 students based in the University Heights district just a block and a half away, and the Prudential Center—an arena seating an audience of around 18,000 for sporting and entertainment events—located between the two, there is a large captive audience to work on. “It’s really a matter of creating a retail offering that will draw everyone out of their buildings and onto the street,” Beit says. The plan is to achieve this through a diversity of retail offerings, some 70 percent of which will be entertainment venues and restaurants. The momentum and buzz have begun to build, and “we believe that this is really going to be the spark that moves development in the business district to another level. Once this development of residential and retail gets going, the result will be a continuous experience connecting the arena district with University Heights,” Beit says. “That, in turn, will form an epicenter of development that will expand outward.” Creating the structure for funding this ambitious $120 million project has been almost as innovative as the vision and architecture. Beit has worked hard to bring together a broad portfolio of partners, including private institutional sources as well as city, state and federal governments. Successfully marrying their interests and satisfying their constraints, he believes the funding will be finalized within 60 to 90 days. Site preparation will then begin at the end of the year and the first building delivered by June 2012. “The beauty of the project is that it has so many dimensions—in terms of economic development for the city, and as a catalyst for further development projects in the central business district and beyond,” Beit concludes. “But more important, it’s a project that has a heart. It will be a visible symbol of the innovative educational policies being incubated in our city.” www.rbhgrp.com
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he word “trust” can have many different levels of meaning. A position of trust can be inferred by law, and confidence is placed in that person or entity making them the nominal owner of the property to be held or used for the benefit of others. Trust can also mean that one has a firm belief in the reliability or strength of someone or something. Trust can also be a duty, a state of being responsible for someone or something. Over the past few years the commercial real estate market has seen some turbulent times. Many firms that were not equipped to handle the violent financial storms have passed away. However, the companies that have survived and weathered the storms have done so because of quality management skills and solid organizational planning. One such company is Homburg Invest Inc. The chief executive of Homburg Invest is Dr. Richard Homburg, who is known for his ability not only as a quality entrepreneur but also as a team builder, surrounding himself with talented and experienced management. Homburg Invest is a real estate investment company with over C$3.1 billion in assets located throughout Canada, the United States and Europe. Dr. Homburg is committed to the well-being of this company. He and his management team own more than 50 percent of the available Homburg stock, which is traded on the Toronto Stock Exchange and on the NYSE Euronext in Amsterdam. According to the company’s 2009 financial statement, it owns 249 properties with over 19.7 million square feet of space, with four main classes of rental space available: office, retail, industrial and multi-family residential. Currently Homburg Invest has a new development project slated to begin in Calgary called Cristal Towers. This undertaking is a planned condominium project that will be located in the Southwest district. This project has met developmental approval by the City of Calgary, with most of the initial planning and engineering having been completed. When it is completed, this structure will have 31 floors and house 214 units. The design of the building is a glass and concrete structure with a curved outer face, and the lot itself will be fully landscaped with a courtyard to give the ground floor a garden-type ambience.
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D.C.M. Mechanical Ltd. D.C.M. Mechanical Ltd. and its staff have built a strong reputation throughout the Albertan Mechanical Industry for our quality of service and workmanship since 1987. Our dedication to quality, detail and technical expertise has earned D.C.M. the honor of receiving the 2000 Premier’s Award of Excellence of the Alberta Research Council Building. Our philosophy in health and safety is that each member of our team, from managers to the individual worker, is of primary importance and is responsible and accountable for safety on the job. This accountability and dedication gained D.C.M. the Certificate of Recognition in Safety in 2008.
Homburg Invest recently completed a two-tower AA-class office building known as Homburg/ Harris. Constructed of glass and concrete, these towers, standing 20 and 10 stories tall, are located in the core downtown district of Calgary and contain 635,000 square feet of leasable area. Before the completion of the project, Homburg Invest sold these buildings to a third party but continued on as the project developer for the purchaser until completion. All the office space has been completely leased, as well as all the retail space available in building one. The company has many other exciting projects in the developmental stage, such as the Viger Montreal resort area. Some of the most exciting news from Homburg Invest is its recent announcement that it would be reorganizing along geographic lines. This reorganization will create five new entities, the first of which will transfer the firm’s holdings in Canada into a real estate investment trust (REIT) named Homburg Canada. REITs were created in the 1960s as a way to make investments in large-scale income-producing real estate available to investors of all kinds. REITs created a liquid security that could be sold and traded just like mutual funds in the securities market. In the past ten years REITs have seen their market capitalization grow from $90 billion to over $200 billion. These investment funds must adhere to strict regulations: 75 percent of the total assets must be in real estate; 75 percent of the gross income must come from rents on real property or mortgages
on real property; and the trust must distribute at least 90 percent of its taxable income to its shareholders. The Homburg Canada REIT will initially contain over C$1 billion in assets, with 6.6 million square feet of commercial gross leasable area and 1,725 multi-family residential units. Consisting of 76 income-producing commercial properties and 43 residential properties, these buildings are located in Quebec, Atlantic Canada, Western Canada and Ontario. Dr. Homburg will be chairman of the Board of Trustees, and the Homburg Group will retain 55 percent ownership of the new REIT, but the majority of the board is independent of the Homburg Group. Homburg Canada REIT is headquartered in Montreal with its own distinct management team. To further the company’s organizational goals, Homburg Invest will be creating Homburg Development Company to hold Homburg’s Canadian land holdings. Also, the firm will be creating another corporate entity to hold all its Western European assets. This subsidiary will eventually be taken public on the NYSE Euronext Amsterdam stock exchange or other European trading entities. Homburg Invest’s Eastern European assets will be transferred to a separate company, while the company’s initial plans are to keep all US assets with the parent company. The ultimate goal with this restructuring is to attract local investment based on asset classification. Also, with this new structure Homburg Invest ensures that the company’s assets are fully valued and understood by the geographical area they are located in. As with any great corporation, the process of management can be overwhelming at times. The challenges that companies face are many. Managers must lead their teams with courage and inspiration, not unlike a captain on a ship during a storm at sea. Just as the crew of a ship trusts their officers to lead them through these violent storms, stakeholders of corporations trust their managers to guide them through uncertain economic times. Homburg Invest has weathered the recent unpredictable economic times and upheld its duties of trust and commitment to its stakeholders. The company is equipping itself with a vision for the future to lead the firm with new organizational goals and structures that will create a profitable framework for years to come. www.homburg.com
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rivate-sector economy has businesses are seeking to ork from federal, state and ernments. SM&A has made mpanies do just that its one ness for the past 28 years. learns how the company is ew market realities to help are for, win and effectively lete government contracts
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M&A was founded in 1982 as a key partner to defense contractors seeking to secure large-scale contracts with the Department of Defense. Since that time, it has expanded into other vertical markets and has helped clients shape their proposals on some 1,200 individual procurements worth a collective $340 billion. With a win rate of 85 percent and an independently certified client satisfaction rating of 93 percent, the company believes it is the most successful firm of its type. Rick Agopsowicz, the senior vice president of business strategy, planning, development and capture, says SM&A has laid out a strategic roadmap to help it thrive in a changing market environment. Those changes include fewer blockbuster-sized programs from government agencies as well as more companies, especially those with new solutions, seeking to sell into the government market. At the same time, the federal government in particular has made it clear that how it chooses vendors in the future will be about much more than the best technology.
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oing to win, but the technical solution he program at the lowest possible ating the performance required” “There’s been a clear message that it’s not the best technical solution that’s going to win, but the technical solution that meets the minimum requirements of the program at the lowest possible cost, delivered on schedule, and demonstrating the performance required,” says Agopsowicz. Such trends often find their way from the federal government into state and local agencies and eventually into the private sector, meaning that businesses that prepare themselves to win government work are often well positioned down the road, he adds. SM&A helps clients get into that position by offering strategic advisory services, competition management and, after a bid has been won, program services to help them carry out work in the timely and
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“We’re here to help our clients win business and then execute it to the government’s standard, and we’re constantly looking to enhance our ability to do that” cost-effective manner the government is seeking. Planning and strategy often begin with the question “How and where can we make money in the public sector?” he says. “A business might have a solution but have never done work in the public sector.” SM&A helps by doing gap analysis that helps vendors understand what barriers might exist to them winning contract awards, be they infrastructure-driven, brand-driven or talentdriven barriers. From there, it offers assistance with building the infrastructure needed to compete effectively for deals. “There’s still a lot of money in the public sector, and there’s a bit of a feeding frenzy over it right now,” says Agopsowicz, who joined SM&A in 2001 and had previously spent 30 years with the US Air Force. Today, each program or potential contract is
drawing more attention than ever. For instance, a $50 million contract is now drawing the attention of large defense contractors that may have once considered such a deal too small to pursue, as well as large consulting firms looking to replace lost commercial-sector work and smaller, emerging players for whom a $50 million contract may be the key ingredient to helping it stage an initial public offering. “As a result of all that attention on the opportunities that are out there, people’s win rates are starting to go down,” he adds. “The work we do is aimed at very strategically helping them get those win rates back up, helping them win more business and then complete that business effectively, on time and on budget.” Another way SM&A brings value to its clients
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is the insight it has into what the emerging and future needs of government agencies will be, intelligence gathered thanks to the sheer volume of professionals it has in the field, many of whom have been recruited to join the firm after leaving government service. The company employs about 450 people and is constantly hiring, even during slow times, to add to its ranks of professionals. When government agencies issue policy statements, meanwhile, SM&A’s internal strategic intelligence group will quickly analyze them and produce internal memos on what they might mean for various industry verticals. SM&A also offers staff support when vendors need to “surge” to meet contract demands and timetables. As an example, it has one of the largest cost & schedule management practices in the industry, helping clients keep even the most complex projects on track. “We have 140 schedulers on staff—the only entities that can match that are some of the top-tier defense contractors.” Increasingly, SM&A is choosing a partnership model with smaller, third-tier vendors that lack many of the capabilities the government is seeking but may have solutions that would be in demand. “In those cases we may become more of a business partner,” says Agopsowicz. “We’re the best in the industry, but with that comes a cost, which smaller companies may not be able to afford outright. If a firm has an innovative product or service that is unique, we might consider partnering in a sharing of profitability and of risk. That can be a way that even a smaller startup might be able to get us on board to help them thrive in the government market.” For its own future, SM&A is following a strategic roadmap developed in 2008 that is revisited frequently and involves SM&A using internal organic development and targeted acquisitions to grow its ability to deliver services to a broader array of clients. The company had a decade-long stint as a publicly traded entity but has been privately held since 2009. Now it’s adding smaller technology firms and mid-sized consulting practices to a client roster that has long included the likes of Boeing, Raytheon, General Dynamics, Lockheed Martin, IBM, Oracle and Cisco Systems. “We’re here to help our clients win business and then execute it to the government’s standard,” says Agopsowicz, “and we’re constantly looking to enhance our ability to do that.” www.smawins.com
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andout Stanley Convergent Security Solutions has grown by acquisition and organically into one of the leading providers of integrated security solutions to homes, businesses and government agencies. Greg Andrews chronicles the strategic nature of the growth trajectory that the division of Stanley Works followed during 2010
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rotecting assets, whether residential homes, commercial businesses or government agencies, has been a growth business for the past decade in the United States. During much of that time, Stanley Convergent Security Solutions has taken a transparent approach to providing security and monitoring services, giving its customers a real-time view into how well it is delivering those services. Based on the company’s rapid and aggressive growth, it appears its approach has resonated with customers of all sizes. Stanley now provides security solutions—fire, intrusion and hold-up alarm monitoring as well as access control and related services and products—to some 285,000 customers across the US from 75 offices nationwide.
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Microdynamics Group Microdynamics
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Convergent Security Systems with 100 percent of its invoice processing. As one of the nation’s fastest growing companies, we are proud to provide our customers with the necessary tools to cut costs and turnaround times. From printing and mailing to e-statements and sorting, our cuttingedge technology differentiates Microdynamics from our competitors. By maximizing print and production speed, automating processes, and performing all services under one roof, we are able to print and mail over 45 million images each month. Our security, customer service attitude, and over 35 years of experience make us one of the industry’s strongest leaders.
on measuring performance and remaining as transparent as possible to customers as a key competitive differentiator in what has long been a low-margin and highly competitive industry. In September 2010 the company announced its Commercial Customer Performance Scorecard program, which builds upon a scorecard system first put in place in 2005 for national customer accounts. The company says its approach is unmatched in the industry and gives commercial customers their own personalized tool to measure performance across five recognized customer touchpoints. The scorecard can measure some 60 metrics, including on-time service, compliant installations, first-time fixes and 24-hour response services times, as well as accurate and timely monitoring actions and accurate and detailed invoices. That scorecard followed the launch early in 2010 of Stanley CSS’s Convergence Center of Excellence, a team approach that attempts to replace the traditionally segmented style of
“Stanley provides security solutions—fire, intrusion and holdup alarm monitoring as well as access control and related services and products—to some 285,000 customers across the US from 75 offices nationwide” Headquartered in Naperville, Illinois, Stanley CSS is now part of Stanley Black & Decker, a Fortune 500 company with a diversified product and services line that spans hand and power tools as well as engineered fastening systems, mechanical access solutions and security services. It provides its security services through four business lines: national accounts, commercial, government and residential. National accounts are serviced with vertically specialized services and product suites, with customized solutions for restaurants, professional services, retail, banking and finance, telecommunications and transportation, among others. Stanley handles everything from access control and loss prevention to closed-circuit television-based video monitoring and critical equipment monitoring. Stanley CSS has made striving for excellence its highest priority and continues to put an emphasis
providing security system integration and seeks to fill in gaps that exist among various vendors, solutions providers and end users. The CCE team is made up of engineers and other professionals trained in a range of manufacturers’ products, as well as application engineers, system engineers, computer-aided design engineers, project coordinators, project managers, program managers, commissioning engineers, certified software specialists, senior systems analysts and team leaders. The teams are designed to handle projects from concept and scoping through and after installation and operation. Stanley’s transparency and scorecard endeavors are built on a technological foundation. In fact, much of the company’s business model relies on the strength of a technology platform that the company designed and built in-house early in its existence. Using that platform, field workers are
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able to employ handheld devices instead of paper reporting and invoices—a system the company credits with helping it eliminate a half-million paper invoices each year and creating significant operational efficiencies along the way. That platform also enables Stanley CSS to provide a suite of e-services to customers, allowing them to use the Web view information on intrusion alarm incidents, order and track new services and even view video clips and associated incident logs. Stanley CSS also credits its platform with enabling it to respond faster to incidents, which in turns enables it to give law enforcement a leg up on criminals. The company says that during the first 60 hours of August 2010, its systems and monitoring specialists were responsible for the apprehension of 20 individuals accused of break-ins to homes and businesses. The company says its Sonitrol technology—acquired through a purchase—has helped it apprehend more than 100,000 such suspects over the past 30-plus years. Meanwhile, during 2010 Stanley CSS continued to grow through acquisition, buying assets of Pyramid Alarm Inc. of Lansing, Illinois, as well as some of the franchises previously owned by Sonitrol. The purchases continue a long-time trend at Stanley CSS, which acquired 10 companies during a 24-month period starting in 2008.
The company also stepped up its efforts to win more federal government business, which has been a growth engine in the recent past. During the year, it opened a Washington DC office— located just a few blocks from the White House— dedicated to pursuing, obtaining and completing government contracts. Stanley CSS added to its lengthy roster of industry awards and accolades during 2010 as well, winning three SAMMY Awards at the industry’s annual International Security Conference. Stanley credits those awards and its customer growth to its focus on the five main customer touchpoints of account management, installation, service, monitoring and billing. It also believes that it has created the strongest possible management team to guide the company forward as it continues to grow and integrate more acquisitions onto its best-in-class technology platform. As the company states on its Web site, “Our vision is focused on the long-term building and strengthening of Stanley Convergent Security Solutions’ position as a leading national provider of electronic security services. Instrumental in leading this vision is the core management team, who have served in leadership roles at several of the largest companies in the industry.” www.stanleycss.com
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Fulcrum BioEnergy is poised to begin construction on its first facility that will produce ethanol from household waste. Keith Regan learns how this trash-toenergy plant could be the first step toward a network of such facilities capable of producing a billion gallons a year of clean, renewable transportation fuel
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ith permits in hand, engineering under way, and equity financing in place, Fulcrum BioEnergy is poised to start construction late in 2010 on what the Pleasanton, California, company sees as the first in a nationwide network of innovative facilities that will transform postsorted municipal solid waste (MSW)—common household trash—into ethanol, electricity and high-value chemical products. Sierra BioFuels, as the plant is known, will be located about 20 miles east of Reno, Nevada, and will use a series of technologies and processes that Fulcrum has combined to create what it calls “intelligent biofuel”—ethanol to be used as transportation fuel that reduces dependence on foreign oil and is much cleaner to produce than traditional fuel sources. In addition, the plant will generate electricity to power the facility and high-value chemical products such as propanol, which is used as an industrial solvent and as a chemical intermediate.
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“The Sierra BioFuels plant is on track to be one of the first plants of its kind when it enters operations in late 2012,” says Fulcrum vice president Rick Barraza. The plant is the result of work dating back to 2007, when Fulcrum’s parent company, US Renewables Group, formed the firm to make the idea of turning trash into ethanol a reality. “We’ve done a lot of work over the past several years to demonstrate that the technology is clean, reliable and economical—ready for commercial deployment.” The plant, and others that are likely to follow in coming years, will use innovative processes to make ethanol and other commercially viable end products. Household trash will be pre-sorted by waste service companies and brought to the plant, where it will be shredded and prepared for conversion through a gasification process that uses extremely high temperatures and high pressure in an oxygen-deprived environment to create a synthesis gas, or syngas, which is made up of hydrogen, carbon monoxide, carbon dioxide and other components. Heat produced during this first stage is used to generate steam used in the plant. The syngas is then passed through an engineered catalyst that converts it into ethanol, which is then shipped to local markets to be used as transportation fuel. Barraza notes that Fulcrum has done extensive pre-production work to secure long-term contracts for both the off-take of the finished ethanol as well as agreements with waste service companies to bring enough trash to Fulcrum plants to produce up to 1 billion gallons of ethanol annually. The low cost profile of the process suggests a relatively short-term payback on invested capital. The predictable flow and low cost of the raw material will enable the company to hedge its revenue to further enhance its profitability profile. “We have a business model that’s very attractive for ourselves and our investors, but it’s also very attractive for the local communities,” Barraza says. Plants are being sited close to existing landfills, which in turn tend to be near large population centers, thus reducing transportation to and from Fulcrum’s plants. “In addition to new green jobs and local renewable fuel production, Fulcrum’s process produces 75 percent
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less greenhouse gas emissions when compared to traditional gasoline production from oil.” Leading the team building the Sierra BioFuels plant will be the engineering giant Fluor, which was selected after an extensive review process to become the lead engineering, procurement and construction (EPC) contractor. Fluor is currently working with Fulcrum’s team on the design of the plant and integration of the various technological components. “We had a lot of interest from firms wanting to be a part of the construction of this project,” Barraza says. “This is something new that has gotten the attention of the industry. Our management team is very excited and believes we have partnered with the right firm that in turn will bring the right people into the fold to help make this project a huge success.” Fulcrum expects the construction of the Sierra BioFuels plant to create around 550 jobs for the Northern Nevada region, while the operating plant itself will employ between 50 and 60, with extensive automation used within the plant where possible. The project will be one of the nation’s first large-scale commercial facilities capable of transforming everyday trash into a clean, renewable transportation fuel. Sierra BioFuels will convert approximately 90,000 tons of municipal solid waste—the amount of trash produced by a city with a population of approximately 165,000— into 10.5 million gallons of ethanol and other chemical products annually, meeting the demand for ethanol in the Reno market. Fulcrum believes the long-term market for ethanol will remain a bullish one, with federal mandates to expand the use of the fuel additive in place. And producing ethanol from trash could become a much more economic and less controversial approach than using corn or even grasses or trees as the feedstock. Sierra BioFuels should be operating by late 2012, and by then other Fulcrum projects will be moving aggressively through the pipeline as well. “We’ll be producing the ethanol near the population centers where the demand for transportation fuels is the greatest,” Barraza notes. “The more people look at our approach, our technology and our business model, the more we think they’ll become excited about what we’re embarking upon.” www.fulcrum-bioenergy.com
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With possibly the lowest entry costs of any business, the cleaning industry is continually squeezed on price, but companies such as Mid-American Cleaning Contractors are trying to provide better value in other ways, as Alan Swaby learns
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ob Swan is the first to acknowledge that, unfortunately, many of the dedicated people providing the day-to-day services in the cleaning industry today don’t get the respect they deserve. “The nature of the business has the cleaning crews working the night shift while the client is out of the office, often leaving them faceless and unknown to customers. Couple that with the fact that cleaning seems to only get noticed when it is done poorly, and as a result customers are often neutral at best toward the janitorial staff,” he says. Swan should know. As partner and vice president at Mid-American Cleaning Contractors (MACC), he has spent a lifetime cleaning up after others. You could almost say it’s in his blood, as both Swan’s father and grandfather were key players in the cleaning industry. Since its formation through a management buyout in 1985, MACC’s business has grown from $2 million annually to $19 million, with a workforce of now more than 700. “We could have grown more quickly had we gone down the acquisition route,” says Swan, “but it’s a better fit with MACC’s business philosophy to organically grow our own client base. There’s no other business where the adage ‘You’re only as good as your last job’ applies more, and we want the last job a client has to be a MACC job. Tight control over systems and quality, leading-edge equipment and regular staff training are essential to our retaining customer confidence. Our present customers are our greatest asset, and our primary objective is to effectively service them.”
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Mid-American Cleaning Contractors
MACC currently has contracts to service more than 15 million square feet of space in 14 specialized industries. Its activities have now spilled over the Ohio border into Indiana, but the company feels no urgency to take on a wider geographical area right now. “There is still plenty of work for us to win close to home,” says Swan. “We continue to demonstrate to prospective customers that we understand their needs and can fulfill them efficiently and at a fair price. We’re more focused on solid growth than rapid growth.” It’s a case of approaching things one job at a time. At one time MACC had no customers at all in the medical industry; now it’s an active player. Once in its history it had no really big contracts; now it has six Fortune 500 clients as well as many representatives of Ohio’s largest manufacturing, financial and university communities. “Getting the first contract of any kind is always the hardest,” says Swan. “The second and third come much easier.” To demonstrate the importance of how the business is managed, MACC, headquartered in Lima, Ohio, proudly tells prospective customers about the Cleaning Industry Management Systems (CIMS) certification it achieved from ISSA, the leading trade association for the cleaning industry worldwide. “In 2007,” explains Swan, “ISSA invited cleaning companies to apply for its CIMS accreditation. Through the review process, applicants were narrowed down to 28 companies, of which just 17 were accredited. Of these, only five, including MACC, were accredited with honors.” CIMS represents an important milestone in the development of the industry as it is the first time that those who actually do the cleaning can be measured. “Equipment and chemical manufacturers have long been subject to industry and quality standards,” says Swan, “but not so for the labor component. ISSA is pulling all the strings together in a drive to raise the professionalism of the business.” CIMS-certified organizations have to demonstrate competence in five distinct areas: quality, service delivery, human resources, health & safety, and environmental stewardship. In fact, these days there is now a CIMS-Green Building certification, which MACC also holds with honors. This additional distinction illustrates MACC’s commitment to delivering green and sustainable cleaning programs, which are vitally important to many companies today. But at the end of the day, with well over 60 percent
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Mid-American Cleaning Contractors
of costs associated with labor, everything depends on the individual actually doing the cleaning. Although late shifts and physically demanding work mean that the position of cleaner is seldom a job of preference, Swan is nevertheless continually amazed by the desire among his staff to do a good job. “Potential employees don’t always come to us,” he admits, “sharing our idea of what constitutes acceptable standards of performance, but with proper training, good supervision, and a better understanding of what MACC expects, it never ceases to impress me what a good job our workers do.” In fact, research shows that, in the right environments, people actually gain a considerable amount of job satisfaction and enjoy working in the cleaning business, a measure that is likely to rise if the discernible trend to more day cleaning continues and night work decreases. “Traditionally,” says Swan, “cleaners have taken over when most of the personnel of the particular building have left for the day. The bulk of the work has been done late in the evening, with just a limited number of porters around during the day to keep a building in shape.” Close analysis, though, is revealing that there are savings to be made by restricting cleaning work to those hours when the building will already be lit (day cleaning). Noisy or wet work still needs to be done when the least number of people are around, usually in the early morning between 5:30 and 7:00 am, but there is a considerable amount on non-obtrusive work that can be performed during normal business hours. Large purchasers of cleaning services, such as State Farm Insurance, have come to the conclusion that savings of 7 to 8 percent in lower energy costs can be expected by cutting out nighttime work. There are also savings to be made by reducing the need for re-cleaning work carried out by the traditional building day attendants. In the meantime, as part of its drive to push down costs and maximize work loading, MACC continues to pioneer the use of robotic floor scrubbers and vacuums, machines that, with precise programming, function without an operator, allowing manpower to be used elsewhere. And, of course, robots don’t need to have the lights on. www.macc.net
cleaning crews work the night shift while the client is out of the e, often leaving them faceless and unknown to customers. As a result, mers are often neutral at best toward the janitorial staff” OCTOBER 10 www.bus-ex.com 121
Modern
alchem Throughout history humankind has searched for the science to understand how to turn base metals into gold. The study and pursuit of alchemy has been a dream of many for thousands of years. While this dream has never been achieved, the Florida Canyon Mine comes fairly close to making this dream a reality, as Rob Harris explains
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hen I think about gold, my thoughts tend to wander to romantic places and different times. I think of ancient civilizations, pirate ships, and hunting for buried treasure. This precious metal has fascinated humankind since the beginning of recorded history and has always been valued for its qualities and color. Gold is dense, it’s soft, it has reflective qualities, and it’s highly conductive. A single ounce of gold can be beaten into a sheet that encompasses almost 300 square feet in size, and gold leaf can be made so thin that light can be transmitted through it. Gold is used today in everything from electrical circuitry to a garnish for gourmet dining.
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Jipangu Holdings: Florida Canyon Mine
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Jipangu Holdings: Florida Canyon Mine
Gold has been used by humankind since the art of metallurgy first appeared sometime between the fourth and third millennium BC. During the Gold Rush of 1848, some 300,000 people stormed California seeking to find fame and fortune. Using the mining techniques of dredging and panning, the prospectors found and located almost all the easily accessible gold in the American West within a few years. With gold becoming increasingly difficult to retrieve, different types of mining processes were developed to separate it from the rock that surrounded it. One such process created in 1887 in Glasgow, Scotland, was called the MacArthur-Forrest process. This was the first industrial application of the use of cyanide to extract gold from low-grade ore. The Florida Canyon Mine is a gold mine located in the northeastern corner of Nevada. Over the past 20 years of operation, this open-pit mine has produced roughly 2 million ounces of gold on a cumulative basis. The Florida Canyon Mine uses a mining process called heap leaching, a process that has been used for hundreds of years. Heap leaching begins with the mined ore being crushed and piled on an impermeable plastic- or clay-lined leach pad. The ore is then irrigated with a leach solution that dissolves the valuable metals. This solution filters through the heap and leaches out the precious metals. Once the leach solution has dissolved all the precious metals, it is collected for further processing. The Florida Canyon Mine is one of the lowestgrade mines in the world. On average the mine has to move and process 75,000 tons per day to produce around 500 ounces of gold. To make that more visual, a mining truck filled to capacity with 150 tons of ore contains only about one ounce of gold. In 2005, the Florida Canyon Mine and its sister mine, the Standard Gold Mine, were purchased by Jipangu Holdings, Inc. of Tokyo, Japan. Jipangu Holdings started off as an equity investor in mineral exploration companies in 1995. Over the years the company’s investments shifted to primarily gold mining operations. With the increased emphasis and expertise in gold mining operations, the firm next moved into ownership and operations management of the gold mines themselves. In 2005 Jipangu Holdings acquired Apollo Gold and became the principal owner of the Florida Canyon Mine and the Standard Gold Mine.
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Jipangu Holdings considers its business concept different from that of most major corporations. Its business model consists of five major points. The first is to look for business opportunities in places where no one else would go. The next principle of the Jipangu philosophy is to look for investments that are below their fair value. The third point is to always have friendly equity participation. The fourth principle of the “Jipangu Way” is that it doesn’t view investments as short-term; Jipangu Holdings sees the future as cyclical and gold as historically one of the key turning points. The last principle is to be the first to know—before your competition does. The Florida Canyon Mine currently is in the drilling and development stage. Gold mines must constantly plan and make sure that all permit applications are being processed correctly. The length of time needed to gain government approval can be very long, so it is of utmost importance that management use proper planning. The design and implementation for a mine when gold is at $600 per ounce is much different than when the price of gold is at its current rate of over $1,300 per ounce. Management has decided that alternating the operations between the two sister mines is the most efficient method. Currently, the Florida Canyon Mine is undergoing construction of a new leach pad while the Standard Gold Mine received its mine permit to operate on September 1 of this year from the Bureau of Land Management. According to the permit, the Florida Canyon Mine has over 1 million ounces of gold in potential resources available. This is four times the resources available at the Standard Gold Mine.
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“Over the past 20 years of operation, the Florida Canyon Mine has produced roughly 2 million ounces of gold on a cumulative basis� One of the standards that must be maintained in any type of surface mining operation is the continuous reclamation of the land that the company mines. This ongoing process must meet all government and environmental regulations. When the mine has run its course, the land cannot be substantially different from when the company started the mining operation. The Florida Canyon Mine was also the first mine in Nevada to use a behavior-based safety program (BBS), which focuses on what people do, analyzes why they do it, and then applies a researchsupported intervention strategy to support what the employees will do. BBS rewards people for
doing a good job instead of penalizing them for doing a bad job. The Florida Canyon Mine has a safety record well below the normal incident rate because of this consistent attention to detail. The gold mining industry requires patience. It can take years to gain governmental approval to begin the mining operation. A company must have quality management with good organizational skills. The firm must have great relationships with excellent vendors who understand that the processes take time. The Florida Canyon Mine and Jipangu Holdings understand the importance of patience and a proper place and time for everything. www.jipangu-hd.co.jp/en/index.html
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Ma Wood Partners not only survived the recession but prospered by investing in multi-family communities and building efficiently designed structures for the masses, as Ric Larson finds out
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ince 2001 the US economy has been propped up—and ultimately shot down—by the precarious housing and real estate market, primarily due to mortgage equity loan withdrawals. Mortgage loans were granted by unscrupulous lenders to people who couldn’t afford to pay them back and were issued, more often than not, for more than the houses were worth. To make matters worse, lenders then sold the dubious loans to investors, divorcing themselves from any legal culpability for putting people into mortgages that made no sense for their individual situations.
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Wood Partners
The Domino Effect then reared its ugly head, causing millions of personal bankruptcies, which included large and small home builders left with newly built, expensive homes and sprawling subdivisions and no one to buy them. The layoff of thousands of construction workers as well as the subcontractors who serviced the projects added to the misery that sent the economy into a tailspin from which some believe it will take years to recover. Wood Partners of Marietta, Georgia, not only survived the economic holocaust but, incredibly, it has thrived and continues to do so during these slow times. Like contrapuntal melodies composed independently but sounding harmonious together, Wood Partners has successfully blended the high notes of becoming the third-largest multi-family builder in the country with the low notes of a deep and dark economic abyss. Founded in 1998 by Leonard Wood, the company has flourished by building more than 34,000 housing units representing an investment of over $4.3 billion, spreading from its home base in the Atlanta area to offices in Charlotte and Raleigh, North Carolina, Washington DC, Florida, Texas, the Southwest, and Southern California. It accomplishes this by developing, constructing and acquiring multifamily communities, with a special focus on multifamily rental and for-sale communities. Since 2008 Wood Partners LLC operates as a subsidiary of CB Richard Ellis Investors Inc. A few of the company’s projects include the Alta Aspen Grove Apartment Community in the metro Denver area, which is not just a runof-the-mill 280-unit apartment complex but a pleasing community that is eco-friendly, close to public transit, and offers the availability of luxurious amenities in keeping with the upscale Polo Reserve area nearby. It’s adjacent to the Aspen Grove Shopping Center, a cavernous, 260,000-square-foot open-air shopping mall that will offer residents of Alta Aspen Grove access to some of the best restaurants and the most exquisite upscale stores in Colorado, all within easy walking distance. The community is near a light rail stop allowing an unfettered commute to downtown Denver and the Denver Tech Center. Another close attractive option to be explored is the Carson Nature Preserve, a 660-acre plot that runs along the Platte River, with over 120 miles of nature
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trails, lake and river access, and the opportunity to observe hundreds of species of birds such as bald eagles and great blue herons. It is scheduled to open for leasing in the spring of 2011. Wood Partners also announced the purchase of a 5.9-acre fully permitted apartment site in the Spectrum Center business park in the Kearny Mesa area of San Diego, where it plans to develop a 379unit luxury apartment community. Construction of the four-story podium project, which will include two separate apartment buildings over two levels of basement garage with 750 parking spaces, started this year, and the first homes are expected to become available for lease in the first quarter of 2012. Financing for the $90 million project, which includes the purchase price, a permitted set of full design plans, and construction costs, was secured in an expedient 60-day time period. The property is located in the master-planned, 244-acre San Diego Spectrum business and residential community. It was owned by Sunroad Enterprises, a local real estate development firm that envisioned the apartment complex as part of its 40-acre office, residential and retail center that was stalled during the recession. Wood Partners will revive the apartment community using the original plans and building permits, which it also purchased. The community will be centered on an expansive pool area with cabanas, a spa, barbecue pits, a waterfall and trellises that take advantage of the area’s temperate weather. A two-story clubhouse with
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reclaimed teak flooring will feature a glass wall and an outdoor deck that overlooks the pool area, as well as a state-of-the-art fitness center and wireless Internet access. Wood Partners also will build a two-acre public park on a parcel of land in front of the project that is being designed and will be owned by the City of San Diego. As a responsible builder providing leadership in the building of environmentally friendly and energysaving structures, Wood Partners has received LEED certification from the US Green Building Council (USGBC) for a project known as the Dallas Glass House, a multi-family high-rise development located in Dallas that is close to Uptown and the upscale communities of Turtle Creek and Victory Park. The building is a split-level project with 375 apartments located in two buildings, one a 21-story structure and the other 12 stories tall. Wood met all of the stringent requirements for certification by the USGBC, which include energy use, water, lighting, use of energy-saving materials, and the incorporation in the building of recycled materials. “This achievement is important to Wood Partners as we make our mark as a leader in environmentally friendly building,” said CEO Ryan L. Dearborn. “Last year Wood Partners made the decision that green building would be at the heart of everything we do. The reward is creating energy-efficient homes for our residents.” In March 2009 Wood Partners announced a new energy directive for the company stating that whenever and wherever possible, new projects
Wood Partners
“Founded in 1998 by Leonard Wood, the company has flourished by developing, constructing and acquiring multifamily communities, with a special focus on multi-family rental and for-sale communities� built by the company will be designed and constructed to meet or exceed standards set by LEED or Energy Star (an international standard for energy-efficient consumer products). The input the company received from home renters in favor of energy-efficient dwellings convinced them and their investors to move forward with green building, which was of special interest to the company in recent years.
It’s been said that luck is the only righteous object of human veneration. Wood Partners has not become the successful company that it has based on luck, but if there is a reason to be awed by its expertise and experience, it is based on hard work, dedication to detail, civic pride, and the collective talents of the company as a whole in the building of efficiently designed structures for the masses. www.woodpartners.com
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